According to news on September 27, during the Google antitrust trial on Tuesday, US time, Eddy Cue, Apple’s senior vice president of services, testified that Apple chose Google as the default search engine on the iPhone because it was the best choice for consumers and there was no other feasible option.
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Cue was Apple's chief negotiator for the multibillion-dollar contract with Google. Testifying Tuesday in federal court in Washington, Cue discussed the long-term agreement between the two companies. While additional details about the agreement may not be further disclosed to the public, Cue's testimony shed light on aspects of the deal that are rarely discussed publicly.
"When it comes to choosing a search engine, we choose the best and make it easy for users to switch," Cue said. But he later added that some "customers have never even heard of" Apple's alternatives to Google search, which could make them worried about making the wrong choice.
Bernstein estimates that Google could pay Apple up to $19 billion this year under the deal, the terms of which have not been disclosed.
Cue said in his testimony that when he renegotiated the Information Services Agreement with Google CEO Sundar Pichai in 2016, one of his goals was to get Google to increase the share of revenue it paid Apple. Under the terms of the agreement, Google will pay the other party an undisclosed share of the net revenue generated from search ads running on Apple devices.
Cue said he believes increasing the revenue share is "right and fair for us." He testified that Apple developed the technology and "deserved" a higher revenue share.
U.S. Justice Department attorney Megan Bellshaw pointed to 2016 email communications between Cue and Apple CEO Tim Cook. Belshaw instructed Cue to refer to the Rosetta Stone and match the letters to the corresponding revenue-sharing ratios so that the exact numbers would not be revealed in open court.
In the first exchange, Cook asked Cue how the meeting went, and Cue said he understood it to be a reference to his negotiations with Pichai over a search contract. Cue responded: "Except for the revenue share, everything else is good." Pichai "didn't give a specific number, but he obviously disagreed with the share ratio."
In an email to Cook, Cue also said he needed to "meet separately with Pichai next week to agree on economic terms, otherwise we should not move forward," still referring to the revenue share.
Cue argued on the witness stand that he was confident of reaching a deal with Google and that he had not seriously considered what Apple would do if negotiations failed. "Of course we had no other viable options and we never really considered what would happen if the negotiations failed," Cue said.
Cue said he believed it was in the best interests of both companies to reach an agreement. He said the revenue-sharing ratio both parties agreed to differed from the figures initially proposed by each. The terms of the agreement are renewed in 2021 to extend the term of the contract.
The Justice Department asked whether there were provisions in the agreement requiring Apple to support and defend the deal in connection with government action. Cue confirmed that this was the case, but he knew little about it. Cue said the clause was requested when Google was under investigation in Europe. Apple's legal counsel has said there would be no problem adding the clause.
'This can frustrate customers'
The Justice Department also asked Cue to detail how Apple will decide where and how to let consumers choose iPhone settings. Another option proposed by Google's rivals is to give consumers a chance to review their search engine options on an equal footing.
Cue's testimony suggests that this approach may face some challenges. When consumers get a new device, they expect it to work quickly, he said. “The more choices there are, the more frustrated customers will be,” he explained. For example, when customers purchase a new iPhone, they are only asked to select key details they want to deal with immediately, such as font size.
Cue said giving users a choice of appearance settings out of the box is different than choosing a search engine. Apple doesn't set a default search engine in some countries because it believes consumers in those regions have better options. But elsewhere in the world, Apple still believes that Google Search provides the best experience.
During his testimony, Cue also reiterated Apple's criticism of Google's privacy practices. He said protecting privacy is important to Apple, including in search, and said Apple has taken steps to limit Google's tracking capabilities on its devices. For example, the company blocked Google's practice of forcing users to log in to use its search engine.
In January 2013, the U.S. Department of Justice showed Cook a slide titled "Competing on Privacy." A slide titled "Privacy Timeline" shows that in 2012, Google reached a $22.5 million settlement with the U.S. Federal Trade Commission (FTC), which was accused of misleading users about tracking issues in Apple's Safari browser. Cue acknowledged that he was aware of the settlement when the Information Services Agreement was negotiated, but added: "We have always believed that we have better privacy than Google."
Another slide quoted former Google CEO Eric Schmidt, who said the company's policy boiled down to "getting close to the scary line," but not crossing it. A later slide called Google's Android mobile operating system "a giant tracking device." "As I've said before, we view the iPhone as a more personal device," Cue testified.
Google declined to comment on Cue's testimony.
During cross-examination, Cue testified that integrating search into its browser products made Apple's products more competitive. He cited Apple founder Steve Jobs's original description of the iPhone, saying it was what consumers expected, that the iPhone was an iPod, a phone and the Internet rolled into one. Cue said Apple pioneered the idea of letting users search the web directly from the address bar, a feature that later became popular in other browsers.
Apple used to let search engines like Yahoo and Bing notify users through Safari that they could change their default settings. But later, when Apple discovered that the search engine was repeatedly notifying users, which degraded the user experience, it blocked the feature.
Cue said it's now easy for consumers to change their default search engine. If they know how to set up Wi-Fi, they should also know how to change search defaults. (little)
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