Google CEO Sundar Pichai, arrives for a US Senate bipartisan Artificial Intelligence (AI) Insight Forum at the US Capitol in Washington, DC, on September 13, 2023. (Photo by Mandel NGAN / AFP) (Photo by MANDEL NGAN/AFP via Getty Images)
Mandel Ngan | AFP | Getty Images
Alphabet CEO Sundar Pichai on Tuesday confirmed that Google pays Apple 36% of Safari search revenue, under the terms of a default search agreement that is core to the Justice Department’s antitrust claims.
Pichai was testifying in a separate lawsuit filed against Google by Epic Games, the maker of Fortnite. An expert witness testifying on Google’s behalf in Washington, D.C., antitrust proceedings revealed the 36% figure in open court on Monday, apparently by accident.
An attorney for Epic asked Pichai if the detail presented by Google’s witness was accurate. “That’s correct,” Pichai responded.
The Epic attorney then alleged that Google pays Samsung, Android’s largest hardware partner, less than half of what it pays to Apple. Pichai replied that while he didn’t know for certain, it was possible.
“It’s like apples and oranges,” Pichai said about the Samsung deal. He added that the deals sometimes pay carriers. In later questioning, Pichai said that Google competes “fiercely with Apple.”
Google spent nearly $49 billion in Traffic Acquisition Costs in 2022. Google’s TAC costs include all of Google’s payments to companies like Apple and Samsung to place its search engine in front of users.
The breakdown of Google’s revenue-sharing agreement with Apple had been not been revealed until the Monday disclosure in court from University of Chicago economics professor Kevin Murphy. Murphy had been testifying on Google’s behalf and was responding to questions from Alphabet’s lead attorney, Williams & Connolly partner John Schmidtlein, when he revealed the figure.
The attorney for Epic also asked Pichai about the exact dollar amount it pays to Apple, to which Pichai said it was over $10 billion. But the attorney pushed back, contending the figure is actually $18 billion.
At the beginning of Tuesday’s trial session, lawyers for both Google and Apple asked Judge James Donato to keep figures concealed.
“It doesn’t seem to be sinking in,” Donato said to the lawyers. “This is a courtroom in the United States — we do business in bright light and open doors.” He added, “Just coming in and saying, ‘We’re kind of sensitive about this,’ isn’t going to fly.”
News outlets and the U.S. Justice Department alike have recently criticized a separate antitrust trial involving Google, alleging the company unnecessarily conceals information related to the case from the public
Alphabet is in the middle of multiple legal battles. It faces two separate Justice Department suits in Virginia and Washington, D.C., related to allegedly anticompetitive behavior. Alphabet is also being sued by Epic Games, which has alleged that the company maintained an illegal monopoly with its Google Play store. Epic filed a similar suit against Apple but lost in federal appeals court in April.
Google and Samsung did not immediately respond to CNBC’s request for comment on Pichai’s testimony. Apple did not comment.
–CNBC’s Kif Leswing contributed to this report.
