For more than a year now, there have been debates about whether Google’s payment to Apple to be the default search engine in Safari would be outlawed.While it had seemed likely this would be the case, what we got was a compromise ruling.It turned out that the difference between Apple earning $20 billion a year and $0 hinged on a single word … It had seemed likely both companies would lose The ruling just over a year ago was very clear: Google’s deal with Apple to be the default search engine did indeed violate antitrust law.
The court found that Google had a near-monopoly in the search engine business and that its $20B+ annual payment to Apple amounted to acting illegally to maintain that market domination in violation of the Sherman Act.While Apple was not guilty of any wrongdoing, and was denied permission to intervene in the case, it did seem likely that the company was going to lose that annual payment and therefore take a huge hit to its services revenue.We had to wait until this week to find out what remedies the court would announce, and while the general expectation was that the payment would be banned, that’s not quite what happened.
The ruling hinged on a single word Investor and former Google Ventures partner MG Siegler turned out to be correct in his own prediction.Instead of banning the payment outright, the court said that Google was not allowed to pay Apple for the right to be the search engine on the company’s devices.That one word – exclusive – means that Google is allowed to continue paying Apple to be the default search engine in Safari on iPhones, iPads, and Macs.
AI was a second factor Another factor in the court’s ruling was the growing trend of people to use generative AI as a substitute for a search engine.As ill-advised as this might be, the judge said that it effectively weakened the importance of search engines in the overall search landscape.So as my colleague Marcus Mendez wrote yesterday, the deal between Apple and Google is largely unaffected by the ruling.
One question does remain: will Google be willing to pay the same amount to be a default search engine in Safari if it is unable to be the exclusive one? I suspect that in practice Apple isn’t going to go looking to sign other deals, so Google will likely pay either exactly the same or a very similar sum.In any case, the amount has been growing each year, so any modest reduction in the payment would quickly be made up by annual increases.I’m sure the directors of both companies were cracking open some extremely expensive champagne.
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