Google's hefty $26bn payments for default search status revealed during antitrust trial

Apple is the main beneficiary of Google's largesse

In a startling revelation during the ongoing antitrust trial against Google, the tech giant's search head, Prabhakar Raghavan, has disclosed that the company paid $26.3 billion in 2021 to maintain its default search engine status across various platforms.

Raghavan's testimony, which took place on Friday as part of the US Justice Department's legal action against Google, provides a detailed perspective on the substantial sums that Google disburses to its partners, with Apple likely being a significant beneficiary of this extravagant expenditure.

"Google pays billions of dollars each year to distributors—including popular-device manufacturers such as Apple, LG, Motorola, and Samsung; major US wireless carriers such as AT&T, T-Mobile, and Verizon; and browser developers such as Mozilla, Opera, and UCWeb—to secure default status for its general search engine and, in many cases, to specifically prohibit Google's counterparties from dealing with Google's competitors," the DOJ complaint reads.

To contextualise the $26.3 billion figure, Alphabet recently reported that its Google Search ad business generated approximately $44 billion in revenue over the past three months and $165 billion in the last year.

While it has been speculated for years that Google pays a substantial sum to Apple to maintain its status as the default search engine on Safari, iMacs, iPhones and other Apple products, Google has attempted to keep the figure secret.

The New York Times recently reported that payments to Apple amounted to $18 billion in 2021. Meanwhile, private wealth management firm Bernstein, suggests that Google's payments to Apple for default search privileges could reach up to $19 billion in the current year.

Google also pays Mozilla for default placement in Firefox and compensates Samsung for the same privilege on its devices. It has established similar arrangements with numerous device manufacturers, wireless carriers and other platforms.

A slide shown in the court on Friday disclosed that Google generated $47 billion in search revenue in 2014, with an expenditure of $7.1 billion to maintain default status. Raghavan told the court that Google's payments to maintain its default search engine status increased nearly fourfold from 2014 to 2021, while its search advertising revenue approximately tripled.

The company has consistently defended its revenue-sharing agreements as being within the bounds of the law.

It argues that these expenditures are essential to preserve the competitiveness of its search and advertising businesses, highlighting that users always have the option to switch to alternative search providers if they are dissatisfied with the defaults.

Google had initially opposed the idea of revealing these figures, asserting that such transparency could hinder its ability to negotiate contracts in the future.

However, Judge Amit Mehta, presiding over the antitrust case, ruled that the numbers should be made public, underlining the importance of transparency in the ongoing legal proceedings.