Google’s default search deal with Apple is so valuable to the search giant that Google pays 36 percent of its search advertising revenue from Safari to keep its search engine as the default in Apple’s browser, Bloomberg reported.
Google and Apple refuse to make this key public out of their long-running default search deal. But their closely guarded secret came out Monday during testimony from Google’s chief economist, Kevin Murphy, during a Department of Justice antitrust investigation examining Google’s search business.
“Perhaps the biggest flaw of the whole trial,” Big Tech on Trial, a blog dedicated to providing updates from the Google trial, posted on X (formerly Twitter).
According to Bloomberg LawGoogle lawyer John Schmidtlein “was very clear” when Murphy disclosed the confidential information, which Google initially said needed to remain confidential because otherwise “it would unfairly harm Google’s competitive position relative to both competitors and other peers.”
For the DOJ-which has made the Google-Apple transaction the center of its case accusing Google of maintaining an illegal monopoly on search- this information confirms how valuable the default settings on iPhones are to the search controller.
The DOJ has argued that Google is paying too much for default search deals to discourage competitors, lock search users into its services, and maintain power over the search industry—a dominant position that could be further strengthened. by Google’s advances with AI, Microsoft CEO Satya Nadella testified. In September, an Apple exec testified that the default agreement between Google and Apple seemed so beneficial that it even stopped Apple from creating its own rival search engine.
It’s still unclear exactly how much the portion of Google’s search advertising revenue derived from Safari is worth, but several estimates have been floated. Statista reported that Google’s advertising revenue is $224 billion in 2022, and based on that, Engadget estimates that it is possible that Apple paid tens of billions of dollars for Google’s default Safari settings.
First, the sources told The New York Times that Google paid Apple up to $18 billion in 2021 for the deal, but the exact amount of revenue sharing was not known until Monday. The DOJ trial also recently revealed that Google paid $26 billion in aggregate for auto deals, which are responsible for driving its now rapidly rising search advertising revenues. Google’s global advertising revenue will reach $340 billion by 2027, Statista reporteddriven primarily by Google’s search engine traffic, which is currently responsible for “roughly 38 percent” of its global advertising revenue.
Overall, across all of those default transactions, Digital Content Next CEO Jason Kint calculated at a post on X that it is possible that Google is receiving “at least $90 billion of annual revenue currently.”
Last month, Google CEO Sundar Pichai testified that default transactions “can make a difference” and can be “extremely expensive” if “correct” but he kept Google’s security of partners like Apple entering these transactions with Google because Google is the top search engine. .
If the DOJ proves that these default transactions ensure that Google maintains an illegal monopoly in general search markets, Google could be ordered to break up its search business, affecting not only Google’s bottom line but its partners, such as Apple.
While the trial resumes for another week, Google continues to profit in the deals. From 2022 to 2023, Google’s ad revenue increased by $5 billion, The Research Institute reportedAnd as if Nadella had predicted, Pichai attributed these benefits to AI-driven innovations across Google products, including search.
“We are continuing to focus on making AI more helpful for everyone; exciting progress and much more to come,” Pichai said in a statement reported by Search Engine.
Judge Amit Mehta, presiding over the antitrust trial, has said that the Google-Apple default agreement is at the “heart” of the DOJ’s case against Google. With each new piece of information revealed about how much Google is willing to pay Apple to maintain their contract, the DOJ hopes to convince Mehta that the contract gives Google an unfair advantage over competitors. This week’s resignation from one of Google’s witnesses threatens to undermine the narrative that Google is trying to build as it drops its defense of that business and others.
Mehta is not expected to issue a ruling in the case until 2024.