From last week, the U.S. Department of Justice's lawsuit against Google, a subsidiary of Alphabet, for alleged monopoly in the online search market has entered the stage of hearings and trials, expected to last for ten weeks.
In response to the Department of Justice and state attorneys general's questioning of &#34;Google as the default search engine for Apple devices&#34; causing unfair competition, executives who switched from Google to Apple several years ago provided further defense.
Google's stock rose more than 1% on Friday before slightly declining at the end of the day, reaching its lowest point in nearly a month. Apple's stock rose 1.8% before significantly narrowing to a 0.5% increase.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/a3e8dc37-3f9c-4781-a923-422b2a693876.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/a3e8dc37-3f9c-4781-a923-422b2a693876.jpeg"/>
On Friday, September 22nd, John Giannandrea, who served as Google's Senior Vice President of Search Engineering from 2010 to 2018 and is currently in charge of Apple's artificial intelligence and machine learning projects, testified in a federal court in Washington, D.C., stating that the Apple iOS 17 operating system update released on Monday has added a feature that allows users to choose a search engine other than Google when browsing in private mode.
It is reported that this change means that iPhone users can easily switch between different search engines such as Google, Yahoo Search, Microsoft's Bing, DuckDuckGo, and Ecosia with just a light tap. However, currently, this feature is only available in private mode, which does not retain users' browsing history, and the default search engine in Safari browser's private mode is still Google.
Public information shows that Google and Apple reached an agreement in 2005 to make Google the default search engine for the Safari web browser. By 2014, Google was paying Apple about $1 billion annually to maintain this advantageous position.
In 2016, the two tech giants successfully renewed their agreement, expanding the use of the Google search engine to Apple's Siri and Spotlight. Previously, Siri had been using Microsoft's Bing search engine, while Spotlight is a search function for finding programs and files on Apple devices. The U.S. Department of Justice's indictment stated that in 2018, Apple CEO Tim Cook and Alphabet CEO Sundar Pichai met again to discuss how the two companies could collaborate to drive search revenue growth.
In return, Apple can receive a portion of the advertising revenue that Google obtains from searches made through the Safari browser, with a maximum share of 50%. The U.S. Department of Justice believes that as the web browser for iPhone, iPad, and Mac, with Safari's market share expanding along with the widespread use of Apple devices, Google has developed into a company that pays Apple between $4 billion and $7 billion annually to maintain the agreement.
In 2012, a Google executive informed investigators from the US Federal Trade Commission (FTC) that if Apple were to replace Google search with Microsoft's Bing search engine, Google's search volume could decrease by as much as 50%. Internal Google emails also revealed that executives repeatedly expressed the idea of &#34;paying for promotional ads and search default settings&#34; and the concept of exchanging revenue sharing for search exclusivity.
Google also actively sought similar agreements with technology competitors, smartphone manufacturers, and wireless network providers outside of Apple. The US Department of Justice believes that this was done to maintain Google's monopoly position in the search field.
For example, Google remains the default search engine on the Firefox browser, and the advertising revenue sharing it pays to developer Mozilla accounts for approximately 83% of Mozilla's revenue in 2021. In 2011, major US wireless carriers such as AT&amp;T, Sprint, T-Mobile, and Verizon signed agreements with Google, allowing them to receive 15% to 40% of the advertising revenue generated through Google search on the devices they sell.
Prior to this, Verizon, which ranks among the top wireless carriers in the US, had agreed to pre-install Microsoft's Bing as the default search engine, while another strong competitor, AT&amp;T, chose to partner with Yahoo Search. Google executives have admitted that the strategy of offering revenue sharing in exchange for default search engine settings is important, &#34;otherwise Bing or Yahoo could easily steal Google's search distribution on Android.&#34;
Data provided by the US Department of Justice shows that by 2020, Google is expected to be the default search engine for 90% of mobile browsers and 83% of PC browsers.
Although Google has never disclosed how much money has been &#34;transferred&#34; through such agreements, last year it paid nearly $49 billion through revenue sharing agreements and fees to online publishers and YouTube creators. Analysts at Sanford C. Bernstein &amp; Co. estimate that Google shared as much as $18 billion of this advertising revenue with Apple last year.
Kent Walker, Chief Legal Officer of Alphabet, stated that the default search engine agreements reached between Google and companies like Apple are different from the actions taken by the US Department of Justice decades ago when it sued Microsoft for pre-installing Internet Explorer browser on Windows operating systems. This is because Google's transactions do not include any technical barriers to switching to competing search engines, and the switching process is simple:
<blockquote>
&#34;People use Google search not because they have no other choice or have to, but because they simply like it.&#34;
</blockquote>
Google believes that users can easily switch search engines &#34;in a matter of seconds,&#34; and Apple's updates to the iOS mobile operating system seem to support this. However, Gabriel Weinberg, CEO of competing search engine DuckDuckGo, still opposes this notion on Thursday, arguing that Google's default status on browsers creates barriers to user switching, stating that &#34;the steps to switch are too many.&#34;
According to analysts, this is the first time in over twenty years that a US federal court has heard a case regarding anti-competitive practices in Silicon Valley, marking the arrival of a &#34;new era of antitrust&#34; in the tech industry.
The US Department of Justice has filed a second antitrust lawsuit against Google for its dominant position in advertising, while the FTC is seeking to break up Meta, the parent company of Facebook. It is expected that the FTC will soon sue Amazon for violating antitrust laws, and later this year, the Department of Justice may also initiate a similar antitrust lawsuit against Apple:
<blockquote>
&#34;If the Department of Justice wins this case, it may seek to separate Alphabet's search business from its other products, including the Android system and Google Maps. This would be the largest forced breakup of a US company since the breakup of AT&amp;T in 1984.
Regardless of the outcome, this trial has the potential to harm not only Google but also business partners like Apple.&#34;
</blockquote>

AAPL

GOOG

GOOGL

Apple's latest iOS 17 operating system has added a setting that allows users to "switch with one click" to search engines other than Google when browsing in private mode, including Yahoo Search, Microsoft Bing, and more. Some analysts have analyzed that last year, Google shared advertising revenue of up to 18 billion US dollars with Apple by becoming the default search engine for Safari browser.

Wallstreetcn

Apple

Alphabet - C

Alphabet

The US Department of Justice has initiated a trial against Google for monopolistic practices in search! Apple's search settings quietly changed in "response".