Tech giant Google confirmed that Apple takes more than a third of its search engine advertising revenue. On November 14, local time, Sundar Pichai, CEO of Google’s parent company Alphabet, appeared in San Francisco federal court to testify in the antitrust lawsuit filed by game developer Epic Games against Google.
Pichai confirmed in court that according to the terms of the search default agreement between the two companies, if Google search is used as the default search engine for Apple's browser Safari, Apple will take a 36% commission on the search advertising revenue that Google will receive.
Just the day before, on November 13, Google witness Kevin Murphy, a professor of economics at the University of Chicago, disclosed this information in the U.S. Department of Justice antitrust lawsuit held in Washington, USA, saying that Google needs to pay Apple 36% of all revenue obtained from search ads on Safari, including on iPhone, iPad and Mac devices.
According to foreign media reports, Google's lawyers "visibly flinched" when Murphy revealed this data, because such information is supposed to be confidential. This data fully demonstrates that the search agreement between Google and Apple has brought huge profits to both companies.
Perhaps in order to show that the witness's mistake did not have much impact, or because he realized that there was no defense, during the court hearing on the 14th, when Epic Games' lawyer asked whether the 36% figure was true, Pichai admitted that "this is right."
Later, Epic Games’ lawyers said that Google paid Samsung, Android’s largest hardware partner, less than half of what it paid Apple. Pichai responded that while he couldn't be certain, it was possible. "There's no comparison between these two things," Pichai said, adding that part of the fee would be paid to the carriers. In follow-up inquiries, Pichai also mentioned that Google and Apple "have fierce competition."
Epic Games’ lawyers also asked Pichai about the specific amount of money paid by Google to Apple, and Pichai responded that it was more than $10 billion. But lawyers dispute that figure, insisting it's actually $18 billion.
Over the past two months, Google has been busy in court with the U.S. Department of Justice.
The U.S. Department of Justice said that Google pays more than $10 billion a year to mobile phone manufacturers such as Apple and Samsung, telecom operators such as AT&T, and companies such as Firefox to maintain its status as the default search engine.
At the beginning of the lawsuit between Google and the U.S. Department of Justice, some foreign media said that Google seemed to be fighting a "losing battle": even if it won the lawsuit, Google would have to demonstrate in court some of the methods used by search engines to obtain user data in detail, further deteriorating the company's public image.
Starting this week, Epic Games’ antitrust lawsuit against Google has officially begun. “Google’s motto (‘Don’t be evil’) has been reduced to almost an afterthought, and Google is using its scale to do evil to competitors, innovators, customers, and users in a series of already monopolized markets,” Epic Games wrote in its lawsuit, first filed in 2020. If Epic Games prevails, Google may be forced to change its App Store rules.
Previously, Epic Games tried to allow players of its popular game "Fortnite" to purchase virtual props directly in the game to bypass the commissions charged by app stores such as Google and Apple, causing Google and Apple to ban the game from their app stores. In 2020, Epic Games also filed a lawsuit against Apple on this matter and ultimately lost the lawsuit.
Regarding Google's current predicament in lawsuits, Paul Swanson, an antitrust lawyer at Holland & Hart Law Firm, said: "It is difficult to imagine that Google can escape the predicament unscathed. If it is involved in so many cases at the same time, there will always be one that will be detrimental to the company."
On October 24, Alphabet, Google’s parent company, released its financial report for the third quarter of 2023 ending on September 30, 2023. The financial report shows that Alphabet achieved revenue of US$76.693 billion in the third quarter, higher than market expectations of US$75.730 billion, a year-on-year increase of 11%. However, due to Google Cloud's revenue growth falling short of expectations, the company's stock price fell by more than 9% overnight after the financial report was released, and its market value evaporated by US$166.6 billion.