Google's default search payments to Apple at risk in antitrust lawsuit
While Google is probably going to come out of its antitrust legal fight intact, it's very likely that its $20 billion Safari default search deal with Apple will undergo some big changes.
Google search on an iPhone
Google is midway in the current search monopoly trial, which will determine how the company should change its ways to minimize its monopoly in the search market. After being found to be a monopoly and violating antitrust law in the United States in August 2024, the court is now hearing ways to remedy the situation.
So far, it seems that the remedies won't be too damaging to Google, with Judge Amit Mehta seemingly supporting some of the less painful actions. Sharing search data with rival firms is one of the lesser acts that Google could be forced to undertake.
When it comes to the widely-publicized possibility of Google divesting Chrome, analysts and lawyers speaking to The Information doubt the judge will require that to happen. It's unlikely for a court to demand major structural changes to a corporation, such as a sell-off of a smaller business arm, unless there is a minimal connection to the monopoly itself.
Since 20% of search queries in the U.S. go through Chrome, divesting the browser would be a big change to Google's business.
Mehta has asked both the U.S. government and Google about whether a Chrome sale would count as a "structural" remedy, which would require a greater level of evidence. This apparently indicates that the judge isn't entirely keen to go down that route.
Search payments are a target
In terms of what the judge may target, one big candidate is Google's practice of making payments to other companies to be the default search in web browsers. This includes paying billions to companies like Apple and Samsung each year.
The level of these payments are considerable, including one estimate from 2022 at $20 billion from Google to Apple to keep Google as the default search on iPhone and Safari.
However, the return to Google is similarly vast. One internal 2020 Google analysis estimated that Google would lose between $28.2 billion and $32.7 billion in revenue if it was not the default search provider on Apple hardware.
If the payments stopped, Google's 2020 estimate was that it would lose between 60% and 80% of search query volume on Apple devices, if it wasn't the default search engine anymore.
Such a decision by the court would be agreeable to the Department of Justice, who has previously asked for the end of the payments. This would mean Apple loses around $20 billion in revenue per year.
Judge Mehta did raise the point that denying Google the payments could allow a competitor to step in and do the same. There was a concern from the judge that another major tech firm, such as Microsoft, could take over and make its own payments to be the default search.
"That line of questioning is recurring," Chamber of Progress director of legal analysis Vidushi Dyall points out. This indicates that the judge is especially interested in the payment plans.
Search data bonanza
While Apple could lose out on Google's regular browser search payments, the search industry as a whole could benefit from the proposal for data sharing. A subject the judge is seemingly keen on allowing.
On the first day of testimony, Mehta discussed with a Google lawyer that Google's search data was one of the "fruits" of its monopoly, and that a remedy should address those fruits. This was taken to mean Mehta was in favor of preventing Google from capitalizing on hogging its search data.
The DoJ has wanted Google to syndicate results with rivals, providing real-time access to queries that could be used on their own results page. Access to Google's search index and data about searches could also be mandated for a ten-year period.
Google chief Sundar Pichai testified that the data-sharing proposal and the combination of proposed remedies from the DoG would make it "unviable" for the company to keep investing in search research and development. Google also put an expert on the stand to claim that competitors would be able to reverse-engineer Google's search engine if the data is shared.
Search shenanigans
Whatever the judge decides is the best set of remedies for Google's search dominance, it will be something that will reverberate across the tech industry. For Apple, that could mean a change to its finances when it comes to default search, but there's a very small chance it could also force Apple further into the field.
Apple doesn't have its own search engine, and Apple SVP of services Eddy Cue insisted in December 2024 that Apple had no interest in creating one. He insisted Apple would prefer to continue to use Google.
Even so, back in October 2023, it was claimed Google had all of the elements in place to make its own and to go it alone. This includes allegations that it had been working on a search engine for apps codenamed "Pegasus" for a few years, as well as the Applebot web crawler and the expansion of its advertising business.
A sudden loss of payments for Google's default search position could give Apple enough of an incentive to actually proceed with such a plan.
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It is worth noting that Apple still has significant room for improvement in this area, particularly regarding the App Store. While the App Store can be populated with millions of programs, it should not be cluttered with a legion of poor programs from a user perspective. In recent years, approximately five to six years after the initial gold rush, the quality of the content has deteriorated to the extent that I find it challenging to use the App Store. In essence, Apple needs to evaluate the programs more closely based on their actual quality rather than prioritizing quantity at all costs.
Apple does have a presence on other platforms which Apple has carefully groomed over years. iTunes has been a longtime presence on Windows and is still available to manage media content to transfer to iDevices (iPhones, iPads, old iPods, etc.).
Apple Music has a presence too, including Android devices in the form of an app on the Google Play Store. This includes a separate Apple Classical Music app too.
And let's not forget about Apple TV which is all over the place. My LG OLED television (running webOS) has an Apple TV app. Yes, it's also available on the Google Play Store for Android smartphones as well as streaming devices like Roku.
Shazam is another Apple service that has a longtime Android app.
So understand that Apple plays the same game too trying to entice non-iPhone/non-Mac users to enjoy Apple services (which now generate a substantial percentage of Apple's revenue).
It's not just about iPhone and Mac hardware sales anymore. That ended about ten years ago. Apple fanboys cannot take a "holier than thou" attitude about this topic.
In any case Apple needs to offer some sort of search engine capability to their users since they don't run their own search engine. Apple's thought process in 2025 is probably "Well, we could just let people choose one from a list during the setup process but most people will pick Google anyhow so why don't we just get paid for it?" One of the first things that I do in setting up a new Apple device (and web browsers) is to change the default search engine to DuckDuckGo. But Apple still gets bucks from Google. That's fine by me. I'm an indirect shareholder of both companies anyhow (like any American with a retirement account).
A real presence on another platform is an actual native piece of software on Windows or Android other than Apple Music, Apple TV, and Apple devices apps does Apple have apps like Final Cut Pro, Safari, Message, Logic, Pages, Numbers, Photos for Windows or Android? Communication to a iPhone or an iPad to a Windows device isn’t quite the same but it is very important for Apple to sell devices.
As far as the search engine is concerned once the $20 billion dollars goes away courtesy of the court system. Apple probably won’t have any choice but to get into search like getting into Apple Maps.
Essentially Google is using their big money to keep competing engines off of all Android phones and iPhones, i.e., 100% of smartphones. They seem to feel that if ChatGPT search or other competitor gets a foot in the smartphone market door, then that door may slowly be pushed wide open. They are probably right.
Apple should charge several engines and load up all of them and let users cycle their searches thru all of them without needing to retype their search string. That may allow other engines to start seeing more revenues and reinvigorate competition & innovation in search. Apple still collects fees from all engines and Google now has to compete again.
Google does not want this to happen and that's why they are paying Apple (and Samsung) so much money so they can keep the Apple Garden gate (and Samsung Garden Gate) closed to other engines.
Eddie Cue seemed to state Apple will now fix this. It will let it's users run the search thru other AI engines since they are now becoming pretty good at search. He seems to be saying Google will still be default but now users may be able to run the same search thru other AI engines without having to retype it all over again. I assume he will pick which AI engines to use based on who will give him best results as well as best revenue share.
In long run, this is good for Apple. More engines will be bidding to go into "pole position" in Safari, Google will have to compete based on merits, and Android may end up losing market share to iOS as a result in long run as Google gradually retreats to protect their core business.
Loss of $20 billion / year payout from Google may be more than made up for Apple by increased iPhone sales in the long run as Google has to re-focus on their core business again. AI field needs to be kept open. This is good for generative Siri so she can catch up quicker as Apple AI servers are being readied.