Apple might lose up to $15 billion annually if the Justice Department requires Google to cease paying the business to be the default search engine on all iPhones, as regulators dispute the legality of the long-standing partnership.
When iPhone users start a web browser and input a search query, Google is always the default search engine. Even while anyone can alter this setting, nearly no one does, resulting in massive traffic (and advertising revenue) for Google from over a billion iPhone users.
9to5Mac reported that Bernstein analysts predicted that Google’s payments to Apple would rise to $15 billion in 2021 and as high as $18-$20 billion this year.
Apple’s overall gross profit last year was around $152 billion, so removing the Google payments would reduce it by at least 10 percent.
This agreement between the two internet titans, which dates back to the early 2000s, is in jeopardy, with regulators accusing Google of anti-competitive measures to maintain its dominance in the search industry.
Google invests billions in default settings with the knowledge that users won’t alter them, Department of Justice attorney Kenneth Dintzer said during a Thursday antitrust case hearing. They are purchasing default exclusivity because defaults are extremely important.
The contracts are the basis for the Department of Justice’s antitrust litigation against the California-based corporation, which was initiated in the final days of the Trump administration. Google is also the target of a similar antitrust suit brought by the states.
According to Bloomberg, Google’s attorney John Schmidtlein stated that authorities misunderstood the industry and should focus more on sites such as TikTok, Amazon, Meta, and GrubHub, where countless individuals conduct their searches now.
You need not visit Google to shop on Amazon. It is not necessary to use Google to purchase aircraft tickets on Expedia,’ he stated. The fact that Google does not encounter the same competition for each inquiry does not imply that the corporation does not face stiff rivalry.
Google’s search engine revenue is unquestionably bolstered by the user information it obtains from Apple’s large fanbase. It already possesses the most popular web browser, Chrome, with a 69% market share, as well as the second-most popular smartphone operating system, Android.
According to Dintzer, Google’s partnerships with Apple, along with smartphone manufacturers such as Samsung and Motorola, as well as Verizon, T-Mobile, and AT&T, make it the default search engine and ensuring it’s preinstalled on phones, making it the ‘gateway’ to the internet for the majority of people.
According to Bloomberg, he stated that “default exclusivity allows Google to routinely refuse rivals’ data.”
Legislators and consumer organizations have long accused Google of exploiting its online advertising and search supremacy. According to the continuing case, Google funnels billions of money gathered from advertisers to pay phone manufacturers to secure its position as the default search engine on browsers.
The government asserts that this arrangement stifles competition and innovation among Google’s smaller rivals and affects consumers by lowering search quality and restricting privacy protections and alternative search possibilities.
Google vowed to fight itself after the case was launched in October 2020, stating, “Today’s complaint by the Department of Justice is gravely misguided.” People use Google because they voluntarily do so, not because they are compelled to or cannot find alternatives.
The Justice Department’s case against Google will not go to trial until sometime in 2023, and Google will appeal even if it loses.
