Google’s Dominance in Search and Search Ads Under Scrutiny
Government Argues Google’s Payments to Apple and Others Stifle Competition
In a high-stakes antitrust case, the U.S. government is challenging Google’s alleged monopoly in the search and search advertising markets. Central to the government’s argument is the over $20 billion Google pays Apple annually to be the default search engine on iPhones and the Safari browser across much of the world. Google also pays more than $1.5 billion a year to wireless carriers and device makers, and over $150 million to browsers for similar defaults in the U.S.
Google Defends Its Popularity and Payments
Google’s attorneys argue that companies like Apple choose Google as the default because it offers a better user experience, not just because of the payouts. They point out that when browsers like Mozilla have opted for alternatives to Google, they have lost users due to the change. Google maintains that it lawfully acquired its market position and scale.
Apple Benefits from Google’s Payments
The deal between Google and Apple, which dates back to 2002, has allowed Apple to avoid the estimated $6 billion annual cost of running its own search engine. Instead, Apple has pocketed extra profits, with Google’s payments accounting for an estimated 17.5% of Apple’s operating profit in fiscal year 2020.
Judge Questions Google’s Payments and Market Dominance
Judge Amit Mehta questioned Google’s attorneys about the payments, asking:
If you’re talking about quality, why pay billions in revenue share?
Mehta also expressed concern about the difficulty of dislodging Google from its dominant position, given the billions of dollars required to develop a competitive search engine and maintain payments to Apple.
Government Envisions a More Competitive Search Market
The government argues that if Google were barred from making payments contingent on excluding rivals, competition would be more even, and companies like Apple would likely end up with more revenue overall. Google’s attorneys counter that if Apple felt Google search wasn’t the best option, it could opt out of the deal, and that Apple has every incentive to ensure competition and deliver the highest quality product.
Case Expected to Drag on for Years
Judge Mehta will hear closing arguments about Google’s dominance in search ads, but it remains unclear when his final ruling will come. Appeals are expected to prolong the case for years to come. In the meantime, Microsoft will need to continue investing in its Bing search engine to maintain its small share of the search market.
6 Comments
$20 billion to avoid a “Bing moment” on iPhones? Google’s playing 4D chess with its wallet.
For $20 billion, Google must really think Siri’s side-eye is worth avoiding!
$20 billion just to avoid using Bing? Now that’s commitment!
Zephyr: 20 billion to dodge Bing? Google’s making power moves!
$20 billion is pocket change if it keeps Siri from asking, “Did you mean to search with Bing?”
OpinionObserver: Dropping $20 billion just to keep Bing at bay? Sounds like Google’s really buying loyalty, or is it fear of Bing?