In 2022, Alphabet paid Apple $20 billion for its position on Google Search on iPhone. The arrangement continues today, but is threatened in the Landmark Antitrust case, U.S. v. Google v. Google. Apple won’t fall without a fight, or even willing to throw Google under the bus.
Google lost its trial in August when U.S. District Court judge Amit Mehta decided to monopolize Google in U.S. search engines and it illegally used the position to remove collateral competition.
The two-week trial aims to determine what fines Google will face, and on Friday night, a flood of “court friends” summary from third parties wanted to express their opinions in the results.
Apple submitted one of the summary, and its own interests are obvious on its page.
One remedy proposed by the Justice Department and the plaintiffs’ states is that Google should be prohibited from providing Apple with “anything of value” for search placement, which could zero Google’s payments if the court decides to implement it to the maximum.
Apple hopes to keep the huge payment, accounting for 18% of Apple’s pre-tax earnings in 2022. First, it thinks Google search is weakened and sees real competition for the first time in years.
“A lot has changed since the trial of liability,” the summary reads. “For the first time recently, Apple has seen a decline in the number of queries conducted with Google from the Safari Web browser. Apple believes this is driven by consumers’ increasingly shifts to new entrants like Chatgpt, Claude and Pellpelplexity.”
“The real competition in the market is not far away.”
Letter stock fell 7.3% when Apple’s senior vice president of services Eddy Cue testified Wednesday.
But that doesn’t stop there. Apple is also trying to draw judges’ attention from this punishment to one of the toughest remedies proposals: forcing Google to share its search and advertising index with competitors, including AI search engines. Currently, AI competition is able to be much smaller than Google’s indexes, and accessing more data will make them better and further weaken Google’s position.
Apple believes that if courts are really interested in cultivating competition in the U.S. search engine market, “sharing Google Search Index data with new AI companies will be used in conjunction with their revolutionary big language model, which will accelerate their competitiveness.”
Apple won’t back down. As we have seen in EU and epic game trials, Apple will always push the envelope to maximize its interests.
Even in the process it hurts Google.
Write to Adam Levine adam.levine@barrons.com
