Google’s Secret $224B Safari Deal Revealed as Apple Profits
During the ongoing Department of Justice (DOJ) monopoly trial examining Google’s search business, a key detail about Google’s default search deal with Apple came to light. It was disclosed that Google pays a significant portion of its search advertising revenue from Safari to keep its search engine as the default in Apple’s browser. According to Bloomberg, the percentage Google pays is 36%.
This revelation came as a surprise, as both Google and Apple had requested that this information be kept confidential. However, during testimony, Google’s main economics expert, Kevin Murphy, inadvertently disclosed the details of the deal. The disclosure confirmed the value of default placements on iPhones to Google, highlighting the DOJ’s argument that Google pays large sums for default search deals to maintain a monopoly and block out competitors.
Although the exact amount of revenue sharing between Google and Apple remains unknown, estimates suggest that Apple could be earning tens of billions of dollars from the deal. Industry sources previously claimed that Google paid Apple approximately $18 billion for the deal in 2021. However, the ongoing trial has shed more light on Google’s expenditures, revealing that the company paid a total of $26 billion for default contracts.
These default deals have been crucial for Google’s search advertising revenue, which is rapidly climbing. It is projected that Google’s global ad revenue will reach almost $340 billion by 2027, with search engine traffic accounting for a significant portion of this revenue.
This issue has become the center of the DOJ’s case against Google, as the agency argues that such default deals help Google maintain an illegal monopoly in the search industry. If the DOJ’s claims are proven, Google may be ordered to break up its search business, impacting not only Google but also its partners, such as Apple.
Google CEO Sundar Pichai recently testified that default deals can be valuable when done correctly and claimed that they result from the superiority of Google’s search engine. However, the disclosed details of the Google-Apple deal challenge this narrative.
As the trial proceeds, Google continues to profit from these deals. From 2022 to 2023, Google’s ad revenue increased by $5 billion, largely attributed to AI-driven innovations across Google products, including search.
Judge Amit Mehta, presiding over the antitrust trial, considers the Google-Apple default deal the heart of the DOJ’s case against Google. With each new detail that emerges, the DOJ aims to convince Mehta that the deal grants Google an unfair advantage over its competitors.
The trial is expected to continue for another week, with Mehta not anticipated to issue a ruling until 2024. As the proceedings unfold, the significance of default search deals and their impact on competition in the search industry will likely remain a central topic of discussion.