Google is the default search engine, how did it spend a lot of money to "buy" Apple?
Author | Phoenix Network Technology
Source | Phoenix Network Technology
"Google is clearly spending money to suppress competitors. ”
On October 6, Beijing time, the US Department of Justice's lawsuit against the search giant Google Monopoly has now entered its fourth week. As the trial progresses, the largest antitrust case in 25 years is exposing some of the hidden behind-the-scenes stories. The entanglement of interests between technology giants has also gradually surfaced.
The Justice Department believes that one of the main ways Google monopolizes the search market and crowds out competitors is by reaching a default search agreement with Apple. With this agreement, Google became the default search engine for Safari on devices such as Apple's iPhone.
In recent days, executives from Microsoft, Apple, search engine DuckDuckGo, Samsung Electronics have testified. Their testimony shows that Google's default search agreement with Apple has become an insurmountable mountain for other search engines.
Four search engine options offered by Safari
How much does the default search affect users? Microsoft CEO Satya Nadella testified that default settings are a key factor in the network effect of digital products, and that users may really like a product, but they will not change the default settings. "Only the default settings are the most important thing when it comes to changing search behavior. You get up every morning, brush your teeth, and search on Google, and that habit can only be changed by changing the default settings. He said.
Money talks
Google argues that other companies use Google Search not because of a corporate monopoly, but because Google's search engine is better. That's really one reason, but more importantly, Google has spent billions of dollars to "lure" other companies into using Google Search as the default search engine, the most notable of which is Google's agreement with Apple.
Apple is financially strong, with cash reserves of US$166.5 billion (1.2 trillion yuan) at the end of the third quarter. So, how much money does Google give Apple to make Apple's heart move? Let's take a look at it with a few numbers below.
- $8 billion
Mark Gurman, a well-known Apple journalist, said that Apple was able to get Google's share of search advertising revenue, which in recent years has earned about $8 billion a year.
- $10 billion
Justice Department prosecutors say Google pays at least $10 billion a year to become the default search engine on Apple and other companies' devices. This is a general number and does not make it clear how much Apple takes alone.
— $15 billion
Nadella testified that during his years as CEO of Microsoft, he had always wanted Bing to replace Google as the default search engine on Apple devices, and was willing to pay nearly $15 billion a year for it, plus other additional costs, but failed. Perhaps, this money is not enough.
— $19 billion
Bernstein expects Google to pay Apple $18 billion to $19 billion this year under the default search protocol, close to 5% of Apple's revenue in 2022.
Apple can't get rid of Google
Although Google has taken out real money, Apple does not want to hang itself from a tree, and it has tried to use DuckDuckGo search, and even acquired Microsoft Bing Search, but failed.
Testimony from John Giannandrea, Apple's head of machine learning and a former Google executive, shows that in 2018, Apple considered acquiring Bing Search or "investing billions of dollars" in a joint venture with Microsoft. Giannandria revealed that Apple was considering using Bing to replace Google in answering some Siri queries and driving other features of the iPhone and Mac.
Giannandria confirmed that Apple is considering buying Bing
In her testimony, Giannandria cited an internal presentation by Apple's head of business development, Adrian Perica. In the manuscript, Perica outlined four collaborations between Apple and Microsoft: developing Siri on its own, co-developing a technology called Knowledge Graph, co-owning Bing, and acquiring Bing.
However, Apple's deal with Microsoft did not go through. Giannandria said he believes Apple CEO Tim Cook told Microsoft not to move forward with the deal.
So why did Apple break off negotiations? Or because of Google. "It's clear that if we form a joint venture with Bing, it will affect our relationship with Google." Giannandria said in testimony last week.
The power of a piece of contract
In addition to Microsoft Bing, Apple had hoped to use DuckDuckGo to replace Google as the default search engine for Apple's Safari privacy mode.
Apple is serious about this cooperation. Gabriel Weinberg, CEO of DuckDuckGo, testified last month: "Our view is that they are actually interested in this collaboration. The people we negotiate with are usually DuckDuckGo users interested in privacy. ”
Weinberg revealed that negotiations between the two sides lasted from 2016 to 2019, during which about 20 meetings and calls were held. Weinberg said that during that time, Apple's contract with Google for the default search engine for Safari "was often a tough issue they didn't want to talk about."
Weinberg had hoped to strike a deal with Apple
In September 2018, DuckDuckGo sent people to Apple's headquarters to discuss integration. Apple has said they're seriously considering integrating DuckDuckGo into Safari in 2019, but Weinberg then realized they still had some lingering concerns. In particular, Apple realized it needed to figure out how to fix the problems related to Google's contracts.
The cooperation came close to success at one point. After the 2018 Christmas break, DuckDuckGo received documents from Apple stating what its revenue share would be if DuckDuckGo became the default search engine for Safari's privacy model. DuckDuckGO estimates that its market share "will increase several times" if it becomes the default search for private browsing mode.
By the summer of 2019, however, DuckDuckGo was beginning to understand that the collaboration wasn't going to happen. Apple did not announce the integration at the Worldwide Developers Conference in June of that year. Four months later, after a meeting, Weinberg concluded that the deal was "dead."
DuckDuckGo has also tried to market it to Samsung, Mozilla, and Opera as the default option for these browsers' private browsing mode, but none of them have reached a deal. The company eventually stopped pursuing this partnership model because it concluded: "The contracts these companies have with Google are a key factor preventing us from making deals with them." ”
Samsung is suppressed
Patrick Chang, a former executive at Samsung Next, the venture capital arm of Samsung Electronics, testified Thursday that he had proposed expanding the use of mobile app developer Branch Metrics' search product in Samsung smartphones, but that the proposal was resisted under pressure from Google. Branch's software provides an in-app search service.
Patrick Chang said he had pushed Samsung to expand the use of Branch's search product on its Android smartphones, but without success. Alexander Austin, the founder and former CEO of Branch, testified in late September that they removed some software features to address Google's complaint when the company tried to reach a deal with wireless carriers and smartphone makers. Austin noted that Branch had to make sure its searches were only available in the app and could not connect to web pages. Patrick Chang said Samsung also faces resistance from wireless carriers such as AT&T, which helps Samsung sell Android phones.
The U.S. Department of Justice showed an email sent by Samsung executive David Eun in August 2020 during the trial. David En complained in an email, "Google is clearly spending money to suppress competitors." ”