- Google pays Apple more than a third of search ad revenue from its Safari browser under the terms of the default search agreement between the two companies, an Alphabet witness said in a public hearing on Monday.
- The 36% figure, which was not previously known to the public, is one of the clearest indicators of how profitable the Google search deal is for both Apple and the search engine company.
- This accidental revelation from Alphabet’s expert witness, University of Chicago economics professor Kevin Murphy, was not unexpected.
Google and Alphabet Inc. CEO Sundar Pichai arrives at federal court in Washington, Monday, October 30, 2023.
Jose Luis Magana | AP
Google pays Apple more than a third of search ad revenue from its Safari browser under the terms of the default search agreement between the two companies, an Alphabet witness said in open court on Monday amid a long antitrust battle between Google and the Justice Department.
The 36% figure, which was not previously known to the public, is one of the clearest indicators of how profitable the Google search deal is for both Apple and the search engine company. Both companies have struggled to limit disclosure of deal details, citing potential anticompetitive effects.
This accidental revelation from Alphabet’s expert witness, University of Chicago economics professor Kevin Murphy, was not unexpected. Murphy’s testimony came as part of the company’s efforts to fight Justice Department allegations that the company illegally maintains dominance in the search and advertising markets.
Williams and Connolly’s antitrust partner, John Schmidtlen, was visibly upset when Murphy revealed the number, Bloomberg News mentioned.
The default research agreement is a major focus of the proceedings. Justice Amit Mehta It has been described Apple-Google deal as the ‘heart’ of the issue. It’s a number Wall Street cares about, too. Bernstein analyst Tony Sacconaghi estimated in a note to clients that Apple will see $19 billion in revenue in 2023 as a result of its virtual search engine deal with Google.
Neither Apple nor Google immediately responded to a request for comment.
Alphabet CEO Sundar Pichai defended such deals when he testified in the proceedings. But Google’s competitors described this arrangement as harmful to their business. For example, Microsoft CEO Satya Nadella responded in detail when he testified in October.
Nadella said that “every year” while he held the top position at Microsoft, he had “dialogues” with Apple about a deal for Microsoft’s virtual search engine, Bing, even if it meant billions in losses in the short term. Nadella said that these talks have not yielded anything yet.
Nadella said the idea of an “open web” is a misnomer. “Everyone talks about the open Internet, but there is already a Google Web,” he said from the podium.