During testimony on behalf of Alphabet at the ongoing Justice Department trial, it was disclosed that Google pays Apple 36 percent of the ad revenue generated when users conduct Google searches through Apple's Safari browser. Kevin Murphy, an economics professor at the University of Chicago, revealed this supposedly confidential figure.
(Photo : Ming Yeung/Getty Images)
MILAN, ITALY - SEPTEMBER 22: The Apple logo outside the Apple Store Milan on September 22, 2023 in Milan, Italy.
Revealing Google's 36% Share of Ad Revenue
Alphabet CEO Sundar Pichai later confirmed the 36 percent during his testimony in the separate Google/Epic Games trial. This revelation adds transparency to the scrutinized relationship between these tech giants, with the DOJ accusing Google of leveraging its resources to secure market dominance by compensating companies like Apple to be Safari's default search engine.
An Epic Games attorney questioned Pichai about the accuracy of the details presented by Google's witness. Pichai affirmed, stating that it's correct. The attorney then claimed that Google pays Samsung, the largest hardware partner for Android, less than half of what it pays to Apple. Pichai responded that he couldn't confirm but acknowledged the possibility.
Describing the Samsung deal as "like apples and oranges," Engadget reported that Pichai noted that the agreements sometimes involve payments to carriers. In subsequent questioning, Pichai emphasized that Google engages in fierce competition with Apple.
Timeline
In 2021, Google reportedly paid Apple approximately $18 billion for this privilege, although it remains unclear whether this sum is part of the 36 percent or a separate fee. Business Insider, on November 15th, suggested that it is included in the 36 percent, but there has been no official confirmation by Google executives under oath.
Last week, that Google and Apple voiced concerns about disclosing the specifics of their agreement, as reported by Bloomberg. In a court filing, Google argued that revealing more details would unreasonably undermine Google's competitive standing in relation to both competitors and other counterparties.
The exact amount of ad revenue Google derives from Safari remains undisclosed, but it's reasonable to infer that 36 percent of that figure would likely amount to tens of billions of dollars.
In 2022, Google allocated nearly $49 billion to Traffic Acquisition Costs (TAC). TAC encompasses all payments made by Google to companies like Apple and Samsung to position its search engine prominently in front of users.
The specifics of Google's revenue-sharing arrangement with Apple remained undisclosed until the recent court revelation by University of Chicago economics professor Kevin Murphy. While testifying on Google's behalf, Murphy disclosed the figure during questioning by Alphabet's lead attorney, John Schmidtlein of Williams & Connolly.
During the inquiry, CNBC reported that the attorney representing Epic pressed Pichai for the exact dollar amount paid to Apple. Pichai initially stated it was over $10 billion, but the attorney challenged this, asserting the figure to be $18 billion.
Also Read: Apple is Making a Search Engine to Rival Google, But Insider Says its 'Four Years Away'
Alphabet finds itself entangled in several legal disputes, grappling with two distinct Justice Department lawsuits in Virginia and Washington, D.C., pertaining to accusations of anticompetitive practices. Additionally, Epic Games has filed a lawsuit against Alphabet, claiming the company unlawfully monopolized the Google Play store.
Related Article: Apple Exec Reveals the Real Reason Why Google Is iPhones and Macs' Default Search Engine
