The US Justice Department has started a 10-week trial against Google, accusing the company of monopolistic practices in dominating the search engine market through its business partnerships, including with Apple, to ensure its search engine is the default on mobile devices.
Google previewed its defense against the U.S. government's charges of illegal monopolization, claiming that its distribution agreements do not harm competition and that consumers have the ability to easily change search engine defaults.
Google is facing a historic legal battle against the U.S. government in a generational antitrust case that questions the company's dominance in internet search and its contracts with device makers, including a lucrative deal with Apple.
Google maintains a dominant position in the global search engine market with a 90.7% market share, while its competitors like Bing and Yahoo lag far behind, according to data from Similarweb. However, Google is currently facing a civil antitrust lawsuit by the U.S. Justice Department for alleged anticompetitive practices. Bing, despite its AI-powered version, has not made significant progress in challenging Google's dominance.
Google's antitrust trial against the Department of Justice centers around claims that Microsoft's search tool Bing failed due to lack of investment and innovation, rather than Google's anticompetitive behavior.
The Justice Department's antitrust trial against Google began with claims that the company pursued agreements to be the default search engine on mobile devices, while Google argued that its search engine's quality was the primary reason for such agreements.
Apple's latest iPhone software update, iOS 17, now allows users to select a search engine other than Google's when browsing in private mode, addressing the issue of difficulty in switching search engines that has been at the center of the US government's antitrust suit against Google.
The Department of Justice has filed an antitrust lawsuit against Google, alleging that the company's billion-dollar deals to be the default search engine on smartphones have created a monopoly, and if the trial is successful, Google may be forced to break up its various businesses.
Apple senior vice president Eddy Cue is expected to testify in court that Apple chose Google as the default search engine on the iPhone because it was the best product and that Apple has revenue-sharing agreements with other search engines, shedding light on Google's licensing agreements and the accusation of monopolizing online search.
Apple used the possibility of replacing Google with Microsoft's Bing as a bargaining chip to extract bigger payments from Google, according to a Microsoft executive testifying in the US antitrust trial against Google.
Microsoft CEO Satya Nadella testified in the U.S. antitrust fight between the Justice Department and Google, dismissing the idea that it is easy to change defaults on devices and revealing that Microsoft had sought to make Bing the default search engine on Apple smartphones but was rejected.
Apple has the potential to compete with Google in building a search engine, as it has a strong search team and has developed a next-generation search engine called "Pegasus," but currently, Apple benefits from the $15 billion annual payment it receives from Google to keep Google Search as the default on Safari.
Apple has turned down opportunities to challenge Google's search engine dominance, including the chance to purchase Bing and make DuckDuckGo the default for Safari's private browsing mode, according to court transcripts unsealed in the US government's antitrust lawsuit against Google.
The US Federal Trade Commission is investigating Amazon and Google for alleged monopolistic practices, with Microsoft CEO Satya Nadella testifying against Google's attempts to monopolize the search market by paying to make its search engine the default choice for Apple and Android.
Google's payment to Apple for maintaining its position as the default search engine on iOS devices is estimated to be between $18 billion and $20 billion per year, according to financial advisor Bernstein, with the deal accounting for 14-16% of Apple's annual operating profits; however, the ongoing antitrust trial against Google could put this agreement at risk.
The antitrust case against Google puts the annual payment it makes to Apple for being the default search engine at risk, which constitutes 14-16% of Apple's profits, but Bernstein analysts believe Apple has options to mitigate the potential impact, such as partnering with another search engine or launching its own.
Apple's long-standing and lucrative agreement with Google to have it as the default search engine on Safari across its products has prevented Apple from developing its own search product and solidifies Google's dominance in the search industry, according to evidence presented in the US v. Google antitrust trial.
Google CEO Sundar Pichai expressed concerns about the optics of Google's deal with Apple, which made Google the pre-selected search option on Apple's Safari browser, according to emails introduced as evidence in the Justice Department's antitrust case against Google.
Google pays Apple between $18 and $20 billion per year to be the default search engine on iPhones, representing roughly 15% of Apple's annual operating profits, and there is a possibility that federal courts could force Google to terminate its search deal with Apple as part of the Department of Justice's antitrust lawsuit against Google.
Google could be paying Apple between $18 billion to $20 billion a year to maintain its status as the dominant search engine on the iPhone, potentially generating 14-16% of Apple's annual operating profits, but this agreement may be at risk due to an ongoing antitrust suit.
Google has been concerned about Apple's potential expansion into internet search, and has been working on strategies to prevent it, including developing its own version of Apple's search tool and leveraging a European law to undermine Apple's control over the iPhone.
Google reportedly paid Apple approximately $18 billion in 2021 to be the default search engine on Apple devices, a deal that not only grants prime placement to Google but also prevents Apple from developing its own search engine.
Google executives explored using EU law to undermine Apple's power and reduce the payment they make to Apple to maintain their default search engine status on Apple devices, as part of an antitrust case brought against Google by the Department of Justice.
Google's senior vice president responsible for search, Prabhakar Raghavan, testified that the company's default agreements with mobile phone and web browser makers were its biggest cost in 2021, revealing that Google paid $26.3 billion for default agreements while earning $146.4 billion in search advertising revenue that year.
Google paid $26.3 billion in 2021 to maintain its default search engine status and acquire traffic, with a significant portion going to Apple, according to testimony by Google's Vice President Prabhakar Raghavan in the ongoing antitrust suit.
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