Google paid a whopping $26.3 billion in 2021 to be the default search engine everywhere

Photo illustration of a gavel casting a shadow over the Google logo
Illustration by Cath Virginia / The Verge

The US v. Google antitrust trial is about many things, but more than anything, it’s about the power of defaults. Even if it’s easy to switch browsers or platforms or search engines, the one that appears when you turn it on matters a lot. Google obviously agrees and has paid a staggering amount to make sure it is the default: testimony in the trial revealed that Google spent a total of $26.3 billion in 2021 to be the default search engine in multiple browsers, phones, and platforms.

That number, the sum total of all of Google’s search distribution deals, came out during the Justice Department’s cross-examination of Google’s search head, Prabhakar Raghavan. It was made public after a debate earlier in the week between the two sides and Judge Amit Mehta over whether the figure should be redacted. Mehta has begun to push for more openness in the trial in general, and this was one of the most significant new pieces of information to be shared openly.

Just to put that $26.3 billion in context: Alphabet, Google’s parent company, announced in its recent earnings report that Google Search ad business brought in about $44 billion over the last three months and about $165 billion in the last year. Its entire ad business — which also includes YouTube ads — made a bit under $90 billion in profit. This is all back-of-the-napkin math, but essentially, Google is giving up about 16 percent of its search revenue and about 29 percent of its profit to those distribution deals.

Most of that money, of course, goes to Apple. The New York Times recently reported that Google’s deal to be the default search engine in Safari across Google products cost the company about $18 billion in 2021. (Apple’s outsize percentage of the total is why that particular deal has been such a focus of the first weeks of the trial.) In addition, Google pays Mozilla for default placement in Firefox; it pays Samsung for the same on its devices; and it has deals with many device makers, wireless carriers, and other platforms to be the default as well.

Until now, these numbers have been closely held secrets, leaving competitors and analysts to speculate about exactly what it’s worth to Google to be the near-universal default choice. The information also comes as Google is beginning its defense portion of the trial, which started with Raghavan testifying that Google is at perpetual risk of losing its cool — and its users — to platforms like TikTok and ChatGPT. Raghavan said that some users call his search engine “Grandpa Google.” (Raghavan has been saying stuff like this for a while now.) He also said that he sees Yelp and Amazon as competitors and that, in such a hot market, Google has to do everything it can to stay relevant and compete. The Justice Department, on the other hand, is making the case that spending $26.3 billion on securing default status everywhere is actually a way to make sure the market isn’t competitive. After a few more weeks of testimony, Mehta will have to decide who’s right.

Title: Google paid a whopping $26.3 billion in 2021 to be the default search engine everywhere
Source: The Verge – All Posts
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Date: October 27, 2023 at 07:08PM
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