Behind the Google-Apple Deal: A Deep Dive into the Billion-Dollar Partnership

• Google
• Apple

The intricate and private interplay between the world's most influential technology behemoths, Google and Apple, is under investigation at the ongoing Google antitrust trial in Washington. Senior Apple executives, including AI chief John Giannandrea and services chief Eduardo Cue, have begun providing evidence despite Apple's attempts to keep them off the stand.

"Our vision is that we work as if we are one company," said a senior Apple employee in a 2018 email to a Google counterpart.

The companies have remained reticent about the estimated $19 billion that Google annually pays Apple to ensure its search engine remains the default on iPhones and other Apple devices — an 18-year arrangement. The specifics of these financial transactions are shrouded in secrecy, with many case filings heavily censored.

The Controversial Partnership

Despite the confidentiality, the public aspects of this case are shedding light on how the once intense rivalry between Apple and Google has softened into a harmonious partnership, often described by market analysts as a duopoly. This collaboration ensures that almost all smartphones sold in the United States, both iPhones and Android devices, come pre-installed with Google's search engine. However, the crux of the contention is whether this agreement is monopolistic and denies Google's competitors automatic access to Apple's user base.

Google's president of global affairs, Kent Walker, has refuted these allegations, arguing that the deal with Apple does not prevent consumers from using other search engines if they desire. "Making it easier for people to get the products they want benefits consumers and is supported by American antitrust law," Walker wrote in a blog post.

Apple's Secretive Stance and Google's Defense

Despite the defense, the Justice Department lawyers argue that Google forced Apple and other smartphone manufacturers into these exclusive contracts. They assert that exclusivity was not Apple's choice and cite Apple's interest in dealing with Yahoo before Google demanded exclusivity.

A Vanderbilt antitrust law professor, Rebecca Haw Allensworth, states that Apple's testimony will hopefully elucidate the intent behind Google's payments. "Google is paying billions of dollars to Apple to have that privileged status," she said. "Any competitor to Google would also want access."

The Implications of the Case

This case marks the first time in nearly two decades that a major tech company faces the Justice Department in court on antitrust charges. The verdict could have far-reaching implications on the tech landscape for the next decade and beyond, significantly if it curtails Google's reach amid an industry rush for emerging AI technologies.

If the court determines that Google acted illegally through its deal with Apple, Judge Mehta could order changes to the terms or even scrap the deal altogether. A similar case against Google, reviewed by the European Union, resulted in devices having a "choice screen" out of the box, giving consumers the option to select their preferred search engine.