During a court session, an economics expert testifying on behalf of Apple disclosed that Google compensates Apple with 36 percent of the revenue generated from searches conducted via the Safari browser on devices like the iPhone, iPad, and Mac. This revelation, reported by Bloomberg, seemed to cause discomfort to Google's chief lawyer, who apparently had a visible reaction when the confidential revenue-sharing details were unintentionally made public.
Bernstein, a wealth management firm, estimated last month that Apple's earnings from this arrangement with Google could be in the range of $18 billion to $20 billion annually. This sum represents a substantial portion, approximately 15 percent, of Apple's total annual operating profits.
Both Apple and Google have been keen on keeping the specifics of their agreement under wraps in the context of an ongoing antitrust lawsuit. They argue that disclosing such details could harm Google's competitive edge in the market.
The partnership, which has seen Google as the default search engine on Apple devices since 2002, has been mutually beneficial. Apple enjoys significant financial gains, while Google maintains its status as the primary search engine choice on the world's leading smartphones.
The U.S. Department of Justice is scrutinizing Google for potentially monopolizing search services. A focal point of their investigation is the search engine deal with Apple, which is a key component of the broader legal battle anticipated to conclude by the end of November.
Microsoft's CEO, Satya Nadella, has voiced concerns that the Apple-Google agreement severely limits competition for other search engines, such as Bing. Nadella highlighted the habitual nature of using Google for search, suggesting that altering default settings might be the only way to introduce competition.
Although Microsoft once proposed acquiring Bing to Apple, which would enable Apple to develop its own search engine, Apple declined. The company doubted Bing's ability to rival Google's search quality and capabilities and was reluctant to forfeit the lucrative revenue from Google.
Eddy Cue, Apple's services chief, defended the choice of Google as the default search engine during his testimony in October, citing Google's superiority as the rationale. Despite alternative search engines being available to users, such as Yahoo, Bing, DuckDuckGo, and Ecosia, changing from Google requires manual adjustment in Safari's settings.
The ongoing antitrust lawsuit against Google poses a threat to this profitable arrangement. Should Google face defeat, it might prompt Apple to explore developing its own search engine. Apple has already shown interest in this area, with its AI chief, John Giannandrea, overseeing a team dedicated to advancing search technology within Apple apps, potentially laying the groundwork for a Google Search competitor.
However, any changes resulting from the lawsuit's outcome, including the termination of the Google-Apple deal, could take years to implement, considering the expected lengthy appeals process if the decision is unfavorable to Google.
