Google payment to Apple concerned search giant execs – wanted to use EU law to reduce it

Update: Google wanted to keep the sum confidential, but a judge just ordered that the total sum paid – across Apple and other platforms – should be disclosed in the ongoing antitrust case. More at the bottom.

A new report says that the growing size of the Google payment to Apple to remain the default search engine on Apple devices concerned senior execs at the search giant – and they wanted to use EU law as a mechanism to reduce it …

Annual Google payment to Apple

When you do a search in the combined URL/search bar in Safari on any Apple device, the default search engine will be used. Unless you have manually changed it, that search engine is Google.

The traffic from searches on iPhones, iPads, and Macs is worth a huge sum of money to Google, as that’s what allows it to display relevant ads alongside search results. To keep that traffic and money flowing, Google pays Apple an undisclosed sum each year for maintaining its default search engine status – with the most recent payment estimated to be around $20B.

That payment is at the heart of an antitrust case the Department of Justice has brought against Google.

Google planned to take advantage of EU law

The New York Times reports that Google execs discussed how they might use EU law to undermine Apple’s power.

Last fall, Google executives met to discuss how to reduce the company’s reliance on Apple’s Safari browser and how best to use a new law in Europe to undermine the iPhone maker, documents showed. While Google considered several options, including how much data it should have access to on the iPhone, it is unclear what the executives decided on.

At the time, the European Union was readying the Digital Markets Act (DMA), which was designed to help smaller companies crack Big Tech’s control of the industry. Google, already one of the world’s largest internet businesses, saw an opening […]

Google, which the law will force to allow more competition in search, explored ways to lobby E.U. regulators to crack open Apple’s tightly controlled software ecosystem so Google could siphon users from Safari and Spotlight, the documents showed. Executives debated how aggressive the company should be in advocating for access to Apple’s operating system.

Effectively, two of the world’s largest companies would be battling, using legislation intended to help small businesses.

Regulations intended to help smaller companies enter the marketplace “very frequently can also be used by incumbents to gain advantage over their rivals,” Gus Hurwitz, a senior fellow at the University of Pennsylvania Carey Law School who focuses on technology and competition, said.

One way the DMA is likely to help Google: It’s expected to oblige Apple to ask users to choose their default web browser during device setup. Chrome searches are, of course, automatically performed on Google.

Google executives figured that if users had to make a choice, the number of European iPhone users who selected Chrome could triple, according to documents reviewed by The Times. That would mean the company could keep more search ad revenue and pay less of it to Apple.

The reduction in payment would be because the annual search payment isn’t a flat sum – it’s instead based on giving Apple a cut of the ad revenue from traffic supplied by the company.

Update: Total Google payment is revealed

Google had acknowledged in its antitrust case that it paid substantial sums of money to Apple and others to be the default search engine, but argued that the exact sums should remain confidential to protect the company’s negotiating position. So far, that has been the case.

However, Bloomberg reports that the judge has now ruled that the total sum paid – but not the breakdown of who got what – should be revealed. That total was, in 2021 … $26.3B

We still don’t know exactly how much of that went to Apple, but previous estimates for that year have been around $18B, representing around a quarter of the Cupertino company’s total Services income, and about 14-16% of total profits.

Photo: Mika Baumeister/Unsplash

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Ben Lovejoy