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The eighth week of the U.S. v. Google antitrust trial marked a climactic moment Monday as Google boss Sundar Pichai took the stand defending the search engine’s market dominance.
The government alleges that Google holds around 90% of the search market by illegally paying rivals like Apple. But, Google asserts the revenue-sharing deal—which the court may rule illegal—is an investment on Google’s end to maintain the competition in its search and ads business.
In his testimony in the U.S. District Court for the District of Columbia, Pichai said Google’s investments in Chrome over the years resulted in an enhanced user experience that led to more Google searches.
Google attorney John Schmidtlein presented an research from 2010 indicating that users who switched from Microsoft’s Internet Explorer to Chrome performed 48% more searches. Those switching from Mozilla’s Firefox to Chrome performed 27% more searches.
Internal documents uncovered last week revealed the tech giant spent a whopping $26.3 billion in 2021 to maintain its position as the default search engine on phones, browsers, and various platforms. A majority of that, about $18 billion, was directed to Apple, The New York Times reported.
Pichai defended the amount it pays Apple because the company owns both the hardware and the software.
“It’s a tough answer for Sundar,” said Adam Epstein, president and COO of adMarketplace, adding that “he’s paying his competitors not to compete in search. Admitting to this would be an automatic loss.”
Threatened by Apple or “mafia” tactic?
On the stand Monday, Pichai shared his concern that competition in the market, especially with Apple, would make it difficult to use Google’s search on Apple devices.
“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 while testifying for over three hours.
An industry insider, who wasn’t authorized to speak to the media, expected this response.
“You’re blaming others in the market for the deal. It’s a mafia tactic,” they said.
Google’s competitors who testified earlier in the trial said the payments thwarted competition. Microsoft CEO Satya Nadella said Google’s influence is immense, and the internet was essentially the “Google web.” He characterized its association with Apple as “oligopolistic.”
Skepticism over Apple as a competitor
Government lawyers aimed to show that Google was worried about Apple becoming more interested in search.
They pointed to an email from 2019 where Pichai asked a colleague to let him know whenever someone from Google’s search team joined Apple.
“There have been moments where people at Google have been concerned about Apple as a potential competitor” in search, Pichai testified without referencing any specific timeframe.
However, some industry sources aren’t convinced with this argument.
Google currently bundles its search ads business with its search engine. Earlier trial proceedings found that Apple considered letting people choose between Google and Yahoo as their preferred search engines on their screens. But Google rejected this offer in an email stating, “No default placement, no revenue share.”
Referring to Google’s contracts with Apple, Epstein said that publishers don’t have the ability to innovate or to understand the value of their search traffic.
“Once you have your competitors relying on you for $26 billion revenue a year, you have complete control over the marketplace,” he said.
The search experience is being upended
While any verdict isn’t expected until next year, there’s a significant likelihood the search industry will undergo a rapid change before then; from both a legal standpoint and through artificial intelligence advancements.
“Google could expect a change in its status quo and that could be a welcome change to marketers,” said Epstein.
While legal experts Adweek spoke to previously questioned a possible separation of Google’s search ads business from its search engine, sources interviewed for this story pointed out that apart from the Department of Justice, 35 states have filed near identical suits against Google, as reported by NPR.
“No one is doing this to get a bucketload of money. They’re doing this to break them up,” the industry insider said.