If Google Didn't Have to Pay Apple $20 Billion to Be on Your iPhone, Would You Still Use It?
It was deemed "odd" by a US judge who will rule on Google's destiny in a landmark antitrust case that the corporation would claim to have the best search engine while simultaneously paying Apple billions to keep competitors out of business.
Over the past 20 years, Microsoft has invested over $100 billion on the development of its Bing search engine, but the company has not gained much market share. In the US, Google is used for about nine out of ten web searches. Bing and a long list of smaller competitors share the remaining requests.
The US government requested on Thursday that a federal judge in Washington, DC
decide that Google maintains its advantage unlawfully by unfairly manipulating
consumers in order to hinder Microsoft and other rival companies.
Due to its dominance, Google was sued by the US Department
of Justice in 2020 on the grounds that it had used exclusionary contracts to
preserve a monopoly in violation of antitrust laws. After beginning a covert
trial at the close of the previous year, the parties took a hiatus for over
five months so that US Judge Amit Mehta could consider the evidence.
On Thursday, Mehta heard closing arguments from government lawyers who
contended that, in the absence of his intervention, Google's hegemony will
endure for years to come, despite emerging challenges from artificial
intelligence chatbots such as ChatGPT. “The search engine industry has been impervious to any
competitor entering,” attorney Kenneth Dintzer said.
Out of the few cases the government has filed against the largest tech companies since intensifying antitrust investigations of the sector in 2019 under former President Donald Trump, this is the first to get to trial. The Biden team hasn't let up one notch.
The government claims that Google pays Apple more than $20 billion a year to be the default search engine on iPhones and the Safari browser in much of the world. This is a key component of the government's case against Google. According to the government, Google also pays wireless carriers, device manufacturers, and browsers over $1.5 billion annually for comparable defaults in the US. The government claims that because Google dominates the US market for search and search ads, it can afford to pay such amounts and still make huge profits.
Google's lawyers respond that businesses like Apple pick
Google as the default not just because they get paid, but also because it
provides a superior user experience. The search company claims that when
browsers like Mozilla choose to use alternatives to Google, they lost users as
a result. Google obtained monopoly strength and scale properly, according to
lawyer John Schmidtlein, who spoke with Mehta. "Microsoft was off the
mark."
The question of whether Google gained its fame unfairly now stands before
Mehta.
Increased Profits
According to court documents, Google's agreements with Apple began in 2002 when the Safari developer was given the opportunity to include Google search into the browser. According to court documents, Google cofounder Sergey Brin first suggested in 2005 that the business share some of its burgeoning search revenue or consider "helping Apple out in other ways." This is when the payments began.
However, as part of an agreement made that year, Google agreed to give Apple half of its revenue in exchange for Google search having to be the default in Safari. Since then, the need has expanded to include more Apple services, however the revenue share and associated incentive costs have remained constant.
Apple has escaped what it once calculated would have cost $6 billion a year to operate its own search engine, according to court documents. Rather, it has retained the excess earnings. According to government estimates, in Apple's fiscal year 2020, Google's payments made up 17.5% of the company's operational earnings.
Mehta questioned Google's legal team on Thursday over the payments. "Why pay billions in revenue share if you're talking about quality?" he questioned, calling the circumstances "strange." He questioned if it was logical that billions of dollars would need to be spent on both the development of a search engine and maintaining Apple's bank account in order to replace Google as the company's primary search engine. "Don't you think the authors of the Sherman Act would be worried?" Mehta enquired. "Is there any way for anyone to unseat Google?"
According to the government, Google could be able to pay to be included as a search option on some phones and services, but it would not be allowed to do so if it meant that competitors would not be allowed to participate. According to the government, there would be more equal competition in that case, and businesses like Apple should make more money overall.
Google's lawyers admit that there would be significant and abrupt changes if Bing replaced Google as the default search engine on iPhones—just not in a way that users would want. Google's lawyer Schmidtlein informed Mehta that Apple may choose to back out of the agreement if it really thought Google search wasn't the best. According to him, Apple has every motivation to ensure that there is competition and that their products are of the best calibre.
On Friday, Mehta will hear closing arguments regarding
Google's hegemony in search advertising. It's unknown when he will make his
final decision; it might take months. After that, it is anticipated that the
case would be appealed for many more years. Microsoft will need to continue
investing in Bing in the interim in order to maintain its little search market
share.