The US v. Google antitrust trial is currently underway, and it revolves around the concept of defaults. Although users have the ability to switch browsers, platforms, or search engines, the default option that appears when they turn on their devices holds significant influence. Recognizing this, Google has invested an astronomical amount of money to ensure that it remains the default choice. Testimony during the trial recently revealed that in 2021 alone, Google spent an astonishing $26.3 billion to secure its position as the default search engine across multiple browsers, phones, and platforms.
The revelation of this $26.3 billion figure came during the Justice Department’s cross-examination of Google’s search head, Prabhakar Raghavan. Initially, there was a debate between the two sides and Judge Amit Mehta about whether the information should be redacted. However, Mehta has been pushing for more transparency throughout the trial, and this was one of the most significant pieces of information that was openly shared.
To put this incredible amount into perspective, Alphabet, Google’s parent company, recently announced in its earnings report that Google Search’s ad business generated approximately $44 billion in revenue over the last three months and $165 billion in the past year. Google’s entire ad business, including YouTube ads, reported profits of almost $90 billion. While these calculations are rough estimates, they suggest that Google is sacrificing about 16% of its search revenue and roughly 29% of its profit for these distribution deals.
It is worth noting that a significant portion of this money goes to Apple. According to a recent report from The New York Times, Google paid about $18 billion in 2021 to secure its position as the default search engine in Safari across Google products. This deal has drawn considerable attention during the trial due to Apple’s significant share of the total amount. Additionally, Google also pays Mozilla for default placement in Firefox, compensates Samsung for the same on its devices, and has similar agreements with various device manufacturers, wireless carriers, and other platforms.
Until now, these figures have remained closely guarded secrets, leaving competitors and analysts to speculate on the true value that being the near-universal default choice holds for Google. The release of this information coincides with Google’s defense portion of the trial, where Raghavan testified about the constant threat Google faces from platforms like TikTok and ChatGPT. Raghavan emphasized the importance for Google to continuously innovate and remain relevant in such a competitive market. He even mentioned that some users refer to Google as “Grandpa Google.” This type of statement has been made by Raghavan on previous occasions. He also acknowledged Yelp and Amazon as competitors, further illustrating Google’s need to stay competitive.
On the other hand, the Justice Department argues that Google’s massive spending on securing default status everywhere actually undermines competition in the market. Over the next few weeks, as the trial progresses, Judge Mehta will need to make the crucial decision regarding who is right in this case.
In conclusion, the US v. Google antitrust trial sheds light on the significant impact of defaults. Google’s enormous investment of $26.3 billion in 2021 alone to become the default search engine across multiple platforms demonstrates the company’s recognition of the importance of this position. The trial will ultimately determine whether these distribution deals impede competition or are merely efforts to remain relevant in a highly competitive market.