(Bloomberg) — Alphabet Inc . paid Apple Inc. $20 billion by 2022 for Google to be the default search engine in the Safari browser, according to recently unsealed court documents in the Justice Department’s antitrust case against Google.
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The agreement between the two tech giants is at the heart of the landmark case, in which antitrust enforcers allege that Google has illegally monopolized the market for online search and related advertising. The Justice Department and Google will make closing arguments in the case Thursday and Friday, with a decision expected later this year.
Google and Apple had hoped to protect the payment amount from public disclosure. At the trial last fall, Apple executives testified that Google paid “billions,” without specifying a figure. A Google witness later accidentally revealed that Google pays 36% of the revenue it earns from search ads to Apple.
Court documents filed late Tuesday ahead of closing arguments mark the first public confirmation of the numbers by Apple’s senior vice president of services, Eddy Cue. Such figures are not disclosed by any of the companies in their securities filings. The documents also revealed the importance of the payments to Apple’s bottom line. For example, in 2020 Google’s payments to Apple accounted for 17.5% of the iPhone maker’s operating income.
The agreement with Apple is the most important of Google’s standard agreements, as it puts the search engine in charge of the most used smartphone in the United States.
Apple first agreed to use Google in the Safari browser in 2002 for free. But the companies later decided to share revenue from search advertising. By May 2021, that meant Google was paying Apple more than $1 billion a month for its default status, prosecutors said in the suit.
Microsoft Corp., which operates rival search engine Bing, has repeatedly tried to lure Apple away from its relationship with Google. The company offered to share 90% of its ad revenue with Apple to make Bing the default in Safari, according to the court documents. These figures were also not previously disclosed.
Microsoft CEO Satya Nadella testified at the trial last year that the company was willing to make a number of concessions, including hiding the Bing brand, to persuade Apple to make the switch, which he said would be “game-changing.”
“Whoever they elect, they make king,” Nadella said of Apple.
—With assistance from Davey Alba, Mark Gurman and Dina Bass.
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