The opinion in the Google search antitrust case, published Monday, is extremely long. Because this was a bench trial, Judge Amit Mehta was on the hook to make factual findings as well as legal findings. So, there are over a hundred pages of findings of fact and even more of conclusions of law, adding up to a 286-page document replete with footnotes, redactions, and even an illustrative graphic of a search result for “golf-shorts” (which, apparently, came up a lot at trial).
The ruling in United States v. Google is a lot to take in. Some of it was previously reported in the press over the course of the weekslong trial; but here, the judge has inadvertently compiled the trial’s greatest hits: catty quotes from executives, embarrassing internal studies, and a bunch of surprising deets about that multibillion-dollar contract that keeps Google the default search engine in Safari.
Apple thinks Bing is pretty bad
Google pays Apple billions of dollars a year to be the default search engine in Safari. But according to Eddy Cue, Apple’s senior vice president of services, there’s no other meaningful alternative. During the trial, he said that “there’s no price that Microsoft could ever offer” to Apple to get the company to preload Bing in Safari.
“I don’t believe there’s a price in the world that Microsoft could offer us,” Cue said at another point. “They offered to give us Bing for free. They could give us the whole company.”
For Google, this is a sign that they’ve earned their default status (which, incidentally, they pay Apple gobs of money to maintain). Judge Mehta says that this is an indication that the “market reality is that Google is the only real choice as the default GSE [general search engine].”
(Of course, Cue’s opinion doesn’t mean Bing is objectively bad. Elsewhere, the opinion notes that Bing’s search quality is comparable to Google’s on desktop, though it falls behind on mobile.)
“These are Fortune 500 companies, and they have nowhere else to turn other than Google.”
In addition to Apple, Google also has contracts with cell carriers and device manufacturers to be the default search engine on Android devices (these contracts operate a little differently since they hinge on Google’s control of the Google Play Store).
It’s not just Eddy Cue refusing to give Bing the time of day — all of these companies recognize Google as the only game in town. None of these “Fortune 500 companies” have a real choice in the matter.
“Google understands there is no genuine competition for the defaults because it knows that its partners cannot afford to go elsewhere,” the judge writes. “Time and again, Google’s partners have concluded that it is financially infeasible to switch default GSEs or seek greater flexibility in search offerings because it would mean sacrificing the hundreds of millions, if not billions, of dollars that Google pays them as revenue share.”
What are the terms of the Google-Apple contract anyway?
According to the opinion, “[i]n return for exclusive and non-exclusive default placements (i.e., user-downloaded Chrome and Safari default bookmarks), Google pays Apple a [redacted] percentage of its net ad revenue, which amounted to $20 billion in 2022.”
This is apparently “almost double the payment Google made in 2020, which was at that time 17.5% of Apple’s operating profit.”
Google and Apple entered into their present contract in 2016. Their dealings date way further back, but around then, Apple rolled out Suggestions. (Think, for example, when you type something out into Spotlight and Apple suggests a website to you — that’s not the same as Google Search.)
This was significant. One Google analysis estimated “a query loss of 10–15% of Safari traffic and a revenue loss of 4–10% of iOS Safari revenue based on Apple Suggestions.” The new 2016 contract includes a specification that “Apple’s implementation of the Safari default must ‘remain substantially similar’ to prior implementations” so that Apple “could not expand farther than what they were doing,” lest Apple “bleed off traffic.”
These days, when it comes to iPhones specifically, “Google receives almost 95% of all general search queries.”
The terms of the 2016 contract seem to have worked out for both companies. Google and Apple extended the agreement in 2021: the contract will expire in 2026. Apple “can unilaterally extend the agreement by two years,” and if both parties agree, they can extend the contract even further, all the way out to 2031. Part of the contract obligates both Google and Apple to defend this agreement “in response to regulatory actions” (e.g., DOJ antitrust lawsuits, like this one).
Source: https://www.theverge.com/24214574/google-antitrust-search-apple-microsoft-bing-ruling-breakdown