Google's $26.3 Billion Investment in Default Deals Revealed in Antitrust Trial

06 Feb 2024

In 2021, Google spent a whopping $26.3 billion to ensure that its search engine is the default choice on most smartphones and web browsers. This revelation came to light during an antitrust trial in Washington, D.C., where a court order forced Google to disclose this previously confidential financial information. This marked the first time Google publicly revealed the significant investment it makes to maintain its search engine's position as the default option for users when they search the web.

The focus of this trial is on the Department of Justice's argument that these default agreements give Google an unfair advantage by excluding rival search engines, allowing Google to maintain a monopoly in the search market. Google, in response, maintains that these payments don't unfairly exclude competitors because many internet users willingly choose its search engine as the default option, even without financial incentives. The Department of Justice initially claimed that Google spent over $10 billion annually on these defaults, but industry experts had expected a higher figure.


Notably, financial analysts on Wall Street estimated that Google paid Apple between $16 billion and $20 billion each year to secure its position as the primary search engine on Apple's Safari browser. Prabhakar Raghavan, Google's Head of Search and Advertising, revealed this financial commitment in court and emphasized that it's the company's most significant expense. He also disclosed that these default payments had more than tripled since 2014. Google's revenue from search advertising in the previous year amounted to $146.4 billion. These default payments make up a substantial portion of Google's total traffic acquisition costs, which totaled $45.6 billion in 2021, covering expenses related to expanding its search services and boosting advertising revenue.


Despite Google's concerns about potential harm to future negotiations, Judge Amit Mehta, overseeing the antitrust case, ordered the disclosure of these figures. Notably, there has been criticism of conducting much of the initial testimony behind closed doors, prompting Judge Mehta to express an intention to make more financial details of the case public.

Analysts warn that if the court prohibits Google from making these default payments, it could actually increase Google's profits while negatively impacting other tech companies. Bank of America analysts estimate that Google is set to pay Apple more than $21 billion in the current fiscal year. Although this would have a significant impact on Apple's services revenue, which was $78 billion the previous year, Apple would still have the option to offer the default position to other search engines.


This ongoing trial represents the most significant antitrust battle between the government and a major tech company since the Microsoft case in the 1990s. The court is expected to hear testimony from Google's CEO, Sundar Pichai, in the upcoming week, marking a pivotal moment in the proceedings.

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