US v. Google: Google's main economics expert says Google pays Apple 36% of the revenue earned from search ads via Safari, a figure that was meant to stay secret

Kevin Murphy, a University of Chicago professor, disclosed the number during his testimony in Google's defense at the Justice Department's antitrust trial in Washington.

Bloomberg 2023-11-14 Leah Nylen

Context & Ripple Effects

The disclosure gives a concrete revenue-share figure to a dispute that had already exposed tension over the confidentiality of Google’s payments to Apple, including Apple’s objection after the DOJ discussed a 2020 payment range in court the earlier dispute over disclosure of the Safari payment.

It also turns estimates of the arrangement’s scale into a more legible economic relationship: later trial coverage tied the 36% share to Google’s 2022 payments to Apple the reported $20 billion Safari default-search payment.

First-order effects

The trial record makes the Apple-Google Safari arrangement easier for the court and litigants to evaluate as a revenue-sharing deal, rather than solely as a default-placement payment.
Apple’s dependence on search-related proceeds and Google’s cost of preserving Safari distribution become more visible to policymakers and investors.

Second-order effects

Antitrust scrutiny can focus more directly on whether the payment economics reinforce Google’s default position, raising pressure on both companies to defend the arrangement’s competitive effects.
Rival search providers face a clearer measure of the economic hurdle to winning prominent browser distribution: they must match not just a fixed access fee but Apple’s share of search-ad revenue.

Third-order effects

If default-search agreements remain subject to this level of disclosure, distribution contracts may increasingly be assessed as recurring platform take-rate arrangements rather than opaque commercial partnerships.
The case points to a broader contest over whether valuable user-routing channels can be monetized through exclusive defaults without entrenching the incumbent that funds them.

The trend: Search distribution is becoming a more explicit antitrust battleground as platform owners monetize default access through revenue-sharing arrangements.

Discussion

@georgescriban George Scriban on threads
App Tracking Transparency hurt Facebook's ad business because they built their ad business on tracking your behavior across mobile apps and not being transparent about it. A good chunk of Google's ads are served against keywords users explicitly type into their search engine, an…
@carnage4life Dare Obasanjo on threads
Google gives Apple 36% of search ads revenue on Apple devices. I guess we now know how much it costs to convince Apple that privacy isn't a human right in certain circumstances. 😉 A great explanation of why Apple's App Tracking Transparency was surgically designed not to harm G…
@quillmatiq Anuj Ahooja on threads
“Google gives Apple a 36 percent cut of all search ad revenue that comes from Safari” Last year it was reported that Apple asked Meta for a cut of their ad revenue but Meta refused. Apple then launched changes to their privacy policy that decimated Meta's ads business. …
Threads Threads on threads
georgescriban — App Tracking Transparency hurt Facebook's ad business because they built their ad business on tracking your behavior across mobile apps and not being transparent about it. — A good chunk of Google's ads are served against keywords users explicitly type into th…
@georgescriban @georgescriban on threads
Look, this is all pretty straightforward from a user perspective (and, thus, from Apple's). When I search on something and Google serves up ads against it on the SERP, I know what's going on. When FB (or any other mobile ad tech) is strip-mining my usage across multiple apps w/…
@georgescriban @georgescriban on threads
That seems like a big stretch of what Apple and Facebook actually discussed, which was about boosted posts (eg, I pay to boost distribution/visibility of one of my FB posts), which Apple saw as an in-app purchase. Apple wasn't asking for a cut of the revenue FB generated from, s…
@carnage4life Dare Obasanjo on threads
Is your argument that there are no privacy concerns with Google Search that if Apple as platform owner cared about they could mitigate? Is that a serious and informed position you are taking? 😂 Apple and Google are literally part of a DOJ investigation about the anticompetitive…
@georgescriban @georgescriban on threads
And there's no relation between treating boosted posts as in-app purchases and Apple moving to limit cross-app/site tracking at the browser and OS level. Had FB and Apple agreed to treat boosted posts as IAPs, Apple would have gone ahead with their App Tracking Transparency feat…
@quillmatiq Anuj Ahooja on threads
Sure, and they also had discussed an ad-free subscriber option as well. But big brands boost their posts for vis all the time and are part of their ad/marketing strategy. “Boosts” are just another version of ads at the end of the day and the privacy changes came to iOS after th…
@asymco@mastodon.social @asymco@mastodon.social on mastodon
Apple's is said to receive about 36% of the revenue generated from Safari Google search. — (I always thought it was a percent though the actual value was a guess). — The assumption that Apple would lose any revenue from Google losing antitrust trial was always a bad take. …
@epro.social Emil Protalinski on bluesky
Whoa, Apple gets a bigger cut from Google search ads in Safari than from its 30% App Store tax. [embedded post]
@bigtechontrial @bigtechontrial on x
Google's witness just let leak that it shares 36% of its search revenue with Apple. Probably the biggest slip of the entire trial.
@leah_nylen @leah_nylen on x
TL;DR it's an important number for the case but you can't use it to calculate the actual payment to Apple because we don't know know the figure for Safari traffic
@jason_kint Jason Kint on x
Sorry not there. Was there indication whether this was of gross or net? We know the deal until 2007 was 45% of gross, 50% of net and then dropped lower until it was brought back to current level (presumably 36% of gross) in 2016. Maybe more interesting would be this... 1/2
@ccm_brett Brett on x
The one truly anti-competitive big tech company is the only one the government isn't going after
@jason_kint Jason Kint on x
If we take the 2021 default deals revenue share ($26.3B) reported by Nylen and we assume Apple has the best terms at 36% of gross then we can estimate G counts at least $90B of its current annual revenue in search default deals. That's insane. 2/2
@antitrustmemes @antitrustmemes on x
tfw when a witness on your side accidentally doxes the one number your company was trying to keep hidden the whole trial [image]
@benremaly Ben Remaly on x
Curious as to how much consideration DOJ gave making a Section 1 claim in this lawsuit. ATR certainly has used a lot of restraint-of-trade-type language. (source: summary judgment filings) https://www.justice.gov/... [image]
@amaldorai Amal Dorai on x
“Let's make it a user-configurable setting” No. Users are so hapless that Google pays Apple 36% of its iOS search revenues instead of counting on users to switch their default search engine from Bing to Google. [image]
@lutherlowe Luther Lowe on x
Amazing to learn the Apple Tax also gets applied to every Google ad appearing on an iOS device
@joshm Josh Miller on x
Google uses Chrome to funnel you to Search Ads Apple gets paid by Google to funnel you to Search Ads Nobody is building a browser to just have *your* back. Like Arc, hate Arc, don't know Arc exists. But we need someone to want to build the best browser and user agent for YOU
@thestalwart Joe Weisenthal on x
A witness for Google in its trial accidentally blurted out a confidential number and the company's lawyer visibly cringed https://www.bloomberg.com/... [image]
@leehepner Lee Hepner on x
This is an astronomical amount of money for Google to pay for something it claims doesn't really matter that much.
@jason_kint Jason Kint on x
Aah, the magical question. And that was in 2021 so it's more likely over $30B of payments now tied to at least $90B of their revenues. That's straight out of their profits, Mark, despite having the best consumer product. Philanthropy?
@bigtechontrial @bigtechontrial on x
Murphy argues rival search engines exert competitive pressure on Google, even if they can't win default status. A telling Q from Judge Mehta to Murphy: “If competitors are able to influence price but not ultimately win the competition, is that really a competitive market?” /fin
@eric_seufert Eric Seufert on x
Regarding the revelation today that Google pays a 36% revenue share to Apple for default search engine status: Microsoft surmised independently that it couldn't offer an equivalent absolute amount of money to Apple for default status even if it surrendered *100%* of revenue.
@bigtechontrial @bigtechontrial on x
So Murphy's argument is that companies like Apple choose Google Search as their default search engine because it's simply a better search engine. But to the extent it's a better search engine, DOJ has argued that's because of the scale it acquires through default agreements. /3
@mrmeador Mark Meador on x
Again, if Apple et al would choose Google anyway because it's the best, what's the $26 billion for?
@jason_kint Jason Kint on x
This is delusional in context of Google shifting from two to three to four paid ads on mobile or Google paying off the largest blocker to white list Google's own ads or fighting tracking prevention within incognito mode. No legit user agent would make either of these two choices.
@pranavdixit @pranavdixit on x
“John Schmidtlein, Google's main litigator, visibly cringed when Murphy said the number, which was supposed to remain confidential.”
@leah_nylen @leah_nylen on x
Apparently days that end in nine are the bombshell ones (today is Day 39). We got the overall payments on Day 29
r/apple r on reddit
Apple Gets 36% of Google Revenue From Search Deal, Witness Says
@megangra Megan Gray on x
Banyan is a kind of tree that spreads outward and strangles competitors. Project Banyan is a Google codename for the effort to stop third-party app stores from proliferating and depriving Google of its App Store revenue. https://www.bloomberg.com/...
@leah_nylen @leah_nylen on x
From @MalathiNayak and me from that other Google antitrust trial: For Google Play, Dominating the Android World Was ‘Existential’ https://www.bloomberg.com/...

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