Alphabet Inc. reportedly paid Apple Inc. a staggering $20 billion in 2022 to secure Google as the default search engine in Apple’s Safari browser. This revelation comes from recently unsealed court documents in the Justice Department’s antitrust lawsuit against Google.
The deal between these tech giants is central to the landmark case, which accuses Google of unlawfully monopolizing the online search market and related advertising. Closing arguments in the case are scheduled for Thursday and Friday, with a decision expected later this year.
Initially, both Google and Apple sought to keep the payment amount confidential. During the trial last fall, Apple executives vaguely mentioned that Google paid “billions,” without specifying an exact figure. However, a Google witness inadvertently disclosed that Google pays Apple 36% of the revenue generated from search ads.
Documents filed ahead of the closing arguments on Tuesday provide the first public confirmation of these figures by Apple’s senior vice president of services, Eddy Cue. Neither company discloses such numbers in their securities filings. The documents also highlight the significance of these payments to Apple’s financial performance, with Google’s payments accounting for 17.5% of Apple’s operating income in 2020.
The agreement with Apple holds immense importance for Google as it secures the search engine’s position as the default choice for the most widely used smartphone in the US.
Initially, Apple and Google agreed to include Google as the default search engine in Safari for free back in 2002. However, they later decided to share revenue generated from search advertising. By May 2021, this arrangement translated to Google paying Apple over $1 billion monthly for its default status, as per prosecutors’ statements in the filing.
Microsoft Corp., the operator of the competing Bing search engine, has made repeated attempts to persuade Apple to switch away from Google. According to the court documents, Microsoft offered to share 90% of its advertising revenue with Apple to make Bing the default search engine in Safari. These details were also previously undisclosed.
Microsoft’s CEO, Satya Nadella, testified during last year’s trial that the company was willing to make various concessions, including concealing the Bing brand, to convince Apple to make the switch, which he described as “game-changing.”
