the United States vs. Google An antitrust trial is about many things, but more than anything else, it is about the power of default. Even if it’s easy to switch browsers, platforms or search engines, the browser that appears when you launch it matters a lot. Clearly, Google agrees and has paid a staggering sum to make sure it’s the default search engine: testimony at trial revealed that Google spent a total of $26.3 billion in 2021 to be the default search engine in many browsers, phones, and platforms.
This number, which is the sum of all Google search distribution deals, emerged during the Justice Department’s questioning of Google’s search chief, Prabhakar Raghavan. The announcement was made after a discussion earlier in the week between the two sides and Justice Amit Mehta over whether the number should be revised. Mehta began pushing for more candor in the trial overall, and this was one of the most significant new pieces of information shared publicly.
Just to put the $26.3 billion figure in context: Alphabet, Google’s parent company, announced in its latest earnings report that Google’s search advertising business brought in about $44 billion over the past three months and about $165 billion last year. Its entire advertising business — which also includes YouTube ads — generated just under $90 billion in revenue. This is all just simple math, but basically, Google is giving up about 16% of its search revenue and about 29% of its profits to those distribution deals.
Google gives up about 16% of its search revenue and about 29% of its profits to these distribution deals
Of course, most of this money goes to Apple. New York times I recently reported that Google’s deal to be the default search engine in Safari across Google products cost the company about $18 billion in 2021. (Apple’s huge percentage of the total is why this particular deal was such a focus in the first weeks of the trial.) Additionally, it pays Google to Mozilla vs. default placement in Firefox; It pays Samsung the same amount for its devices; It has deals with several device makers, wireless carriers and other platforms to be virtual as well.
Until now, these numbers have remained top secret, leaving competitors and analysts speculating about exactly what Google deserves to be the near-universal default choice. This information also comes as Google begins the defense portion of the trial, which began with Raghavan testifying that Google is in constant danger of losing its cool — and its users — to platforms like TikTok and ChatGPT. Raghavan said some users call its search engine “Grandpa Google.” (Raghavan has been saying things like this for a while.) He also said that he sees Yelp and Amazon as competitors, and that in such a hot market, Google has to do everything it can to stay relevant and competitive. On the other hand, the Department of Justice asserts that spending $26.3 billion on securing virtualization everywhere is actually a way to ensure that the market… not like that competitive. After a few more weeks of testimony, Mehta will have to decide who is right.