Alphabet CEO Testifies In Google Search Trial: We Pay Billions To Keep Apple At Bay

Alphabet CEO Sundar Pichai testified on Monday at the US government's Google antitrust trial – and acknowledged that, yes, default settings are valuable.

That said, he pushed back against the government's position that defaults are determinative by arguing that the estimated $18 billion to $20 billion Google pays Apple annually to be the default search provider in Safari reflects concerns about competition from Apple rather than maintenance of an alleged Google Search monopoly.

In other words, Google reckons it's better or more cost effective to pay off Apple and keep Google Search the default on iPhones than face an Apple-powered search engine or some other rival.

"Given that Apple designs the experience, it wasn't clear how they would change the experience if the financial incentive wasn’t there,” Pichai said, according to the New York Times.

Pichai asserted that Google's deals to be the default search engine in various mobile and desktop browsers, on which the internet giant spent $26.3 billion in 2021 per documents discussed at trial, actually enhanced competition – a position rivals including Microsoft have disputed.

The Justice Department is trying to prove that Google's 90 percent market share is the result of unlawful behavior – paid deals that stifle competition and anticompetitive technical barriers. Google has maintained it simply makes the best search product.

The government's case has focused frequently on the power of default settings to shape behavior, which should be obvious to anyone who has seen the ad industry fight tooth and nail to have people opt-out of data sharing rather than opt-in. Basically, most people don't change their settings and that's become an issue in the antitrust trial.

A presentation [PDF] published last month by the government in conjunction with the September testimony of Professor Antonio Rangel, a professor at CalTech, cites numerous times over the years that internal Google communications have highlighted the importance of default settings.

Rangel's slide deck makes this point, among other ways, by citing a 2005 email from Google to Microsoft that objected to the bundling of MSN Search with Internet Explorer. The message states, "The problem with the default settings are further compounded by how changes to the default are handled. As you know, most end users do not change defaults."

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And this is underscored in a just-released 2019 email about interoperability regulatory strategy from Joan Braddi, Google’s head of product partnerships, to another Google exec, Paul Shaw. Concerned about the possibility of a regulatory requirement that browsers offer users a choice screen through which to explicitly select a search engine, Braddi wrote [PDF], "As you know, we are the default search engine in Apple's browser (Safari). Forcing a choice screen on Apple likely will not be good for us."

The Department of Justice published several more internal Google documents on its trial exhibits page over the weekend. While there's nothing in the way of a smoking gun, the internal documents shed light on the extent to which Google can control revenue from search ad auctions to achieve desired financial results.

For example, the Feds released a 2008 Google presentation [PDF] about ad quality that on page 111 talks about the "4 big knobs and levers" available to alter ad auctions. These settings allow Google to influence ad click-through rates, return on investment, and revenue per thousand impressions. Incidentally, one of the four core technologies in ad quality is the Smart Ad Serving System, referred to in the slide deck as SmartAss.

Chrome exists to serve Google Search

Another recently released set of email messages [PDF] from James Kolotouros, a Google veep overseeing Android partnerships, to a colleague focused on Russia and Android search deals with Xiaomi and Samsung, describes Chrome as a vehicle for Google Search.

"I don't think I want Chrome in the hot seat if the user sets the default," he wrote. "Chrome exists to serve Google Search. And if it cannot do that because it is regulated to be set by the user, the value of users using Chrome goes to almost zero (for me)."

Also, the Feds published a 2019 email chain [PDF] involving Google SVP Prabhakar Raghavan about how to respond to DuckDuckGo gaining attention for promoting more private search. In his message to Ben Gomes, VP of search, Raghavan pushes back at what he calls "gut" concerns about the market value of privacy and asks for data that shows Google Search needs to be revised.

"I disagree with a methodology that consists of conflating 'people care increasingly about privacy, DDG is making a lot of noise about it, Sundar mentioned it in I/O' (all true statements) then concluding this needs a product change."

If the government prevails in its antitrust case, which is expected to conclude in mid-November it will be evidence like these documents that change Google Search. ®