May 24, 2024, 13:45

The secrets Google spilled in court

The secrets Google spilled in court

Sara Morrison
is a senior Vox reporter who has covered data privacy, antitrust, and Big Tech’s power over us all for the site since 2019.

The Google search antitrust trial is expected to wrap up by Thanksgiving. And while we’ll have to wait until next year for a verdict, there are a few things we learned over the last two months of the first big test of the limits of Big Tech’s power.

The Department of Justice is accusing Google of using its monopoly over internet search to freeze out its competitors — real or potential. Instead of innovating and putting out a superior product that users prefer, as Google insists it does, the government says the company is resting on its laurels and paying off manufacturers, carriers, and browser developers to make Google the default search engine across countless devices and operating systems. That’s why, when you search for something on Safari or Firefox, ask Siri a question, or type something into the search widget that came pre-installed on your Samsung Galaxy’s home screen, Google is powering that search. And although you can always change it to a different search engine, the DOJ maintains that most people don’t know they can or don’t know how, creating an exclusionary barrier to entry.

Part of the problem is that Google pays billions of dollars every year for default placement, a price almost none of its competitors — if it really even has any — can afford. That helps Google make many more billions of dollars off the ads on those search results. Having as many people using Google Search as much as possible is what makes the company’s search engine so attractive to advertisers, and the majority of Google’s revenue comes from those search ads. The incredible amount of data Google collects from those trillions of searches also helps it monetize some of its other services and gives it a major competitive edge over other search providers. Knowing what everyone everywhere wants to know all the time has made Google one of the most valuable companies in the world.

Over the course of the trial, we’ve learned a little bit more about the lengths Google has gone to to stay on top and boost revenue, and how hard it is for other search engines to gain a foothold. We don’t know as much as we could because Google has also gone to great lengths to keep as much information as possible away from the public.

Is Google using its dominant search market position to illegally freeze out competition, giving users a worsening search experience and advertisers less bang for more bucks because there’s no other game in town? Or is Google simply offering the best experience possible, without the added hassle of having to wade through a pesky choice screen the first time users open a search app?

We’ll find out what a judge thinks in a few months. In the meantime, here’s what we learned in the landmark trial, the result of which may change your internet experience.

1. Google paid $26.3 billion in 2021 to own search defaults — and made a whole lot more from search ads

Midway through the trial, Judge Amit Mehta unredacted part of a slide that showed how much Google pays out on those default search agreements. And it’s a lot! In 2021, the most recent year available, Google gave $26.3 billion to companies like Apple, Verizon, Samsung, and Mozilla. Google’s search ad revenue that year, which is also on the slide, was $146.4 billion. (In 2014, the first year these numbers are available, Google paid $7.1 billion and made $46.8 billion.) Not a bad return on the company’s investment. It’s also a high bar that no competitor, except maybe Microsoft, could hope to reach — more on that later.

2. Google’s secretive deal with Apple gets a little less secret

Google’s revenue-sharing deal with Apple was a major part of the trial because Apple is believed to get the bulk of what Google pays out in those agreements. Having a default search placement on Apple devices, which make up roughly half of the smartphone market in the US, is extremely important to Google. We’ve known for years that Google pays Apple for that default placement — this also stops Apple from developing its own search engine — but that’s about it. While Google tried to keep virtually everything about the deal away from the public, we still got a few new details.

In an apparent slip-up, Google’s own witness in the waning days of the trial told us how much of Google’s ad revenue Apple gets: 36 percent for searches done on its Safari browser. The monetary value of that 36 percent is still a mystery. Judge Mehta did not disclose how big Apple’s slice of the $26.3 billion pie is, allowing the DOJ only to say it’s “more than $10 billion.” But the New York Times, citing internal Google sources, put it at $18 billion.

3. Apple thought about buying Bing

We didn’t just find out some of Google’s secrets; a few things about Apple came out, too. Apple’s senior vice president John Giannandrea testified that his company talked to Microsoft about buying Bing in 2018. Apple ultimately decided against it, but not before using the possibility as leverage in its search default negotiations with Google, something Microsoft is still pretty sore about. Apple executive Eddy Cue testified that the company chooses Google to be the default search because it believes Google is the best for its users. But speaking of Bing …

4. Microsoft was desperate to make Bing happen

Multiple Microsoft executives, including CEO Satya Nadella, testified that Microsoft really, really wanted to make Bing the default search on Apple devices, to the point where it was willing to lose billions of dollars a year for the privilege. Samsung and Verizon, the trial also revealed, essentially refused to even negotiate with Microsoft over changing their search defaults to Bing. Perhaps they were thinking of Mozilla’s experience switching from Google to Yahoo. Mozilla CEO Mitchell Baker testified that Yahoo offered more money and fewer ads, so Mozilla’s Firefox browser switched the default from Google to Yahoo in 2014. Mozilla switched back to Google a few years later, which Baker attributed to Google’s search being better for its users, echoing the point that Google emphasized in its defense.

5. Google wasn’t always a big fan of search defaults

When Microsoft was the dominant player in web browsers, Google didn’t think search engine defaults were so great, and said as much in newly revealed documents. In 2005, former Google lawyer David Drummond warned Microsoft, at that point just a few years removed from its own antitrust woes, that making Microsoft’s search engine the default on its (then market-leading) Internet Explorer browser would be a bad look to antitrust regulators, and Google might sue Microsoft over it.

6. How Google’s money printer goes brrr (at someone else’s expense)

We got a few glimpses of how Google milks or manipulates its search engine for additional revenue. In March 2019, the company was trying to figure out what to do about the possibility that it wouldn’t meet its search revenue targets due to a “softness” in search queries. An email from then-head of search, Ben Gomes, expressed concern over how his division was “getting too involved with ads” and that he was “deeply deeply uncomfortable” over the prospect of increasing the number of search queries (and therefore the number of ads served) by degrading the user experience. There’s no evidence Google actually did or asked for this, and Gomes testified that he was discussing things the company would never actually do. Gomes stepped down as head of search in 2020. He was replaced by Prabhakar Raghavan, who was previously the head of Google’s ad business.

Perhaps more damning was an admission from Jerry Dischler, Google’s current head of ads, that the company has tweaked search ad auctions in ways that may increase prices to advertisers by 5 or even 10 percent so that Google could meet its revenue goals. Dischler said Google didn’t tell advertisers about the changes. They know now!

“I think that that’s a critical fact,” Lee Hepner, legal counsel at the American Economic Liberties Project, an antitrust advocacy group, told Vox. “Not just because it’s kind of surprising that they’re doing this without advertisers’ knowledge, but also because it’s indicative of Google’s monopoly power in the search ad market if they are able to raise prices on advertisers without losing market share.”

Google told Vox that the company “invest[s] significantly in ads quality to continuously improve on our ability to show ads that are highly relevant to people, and helpful to what they’re searching for.” That includes, the company said, “implementing quality thresholds for advertisers, which help eliminate irrelevant ads and have been a widely known part of the auction for more than a decade.”

7. There’s a lot that Google made sure we don’t know

While the trial revealed more of the company’s inner workings than it might have liked, Google was able to keep a lot of things secret. A good amount of testimony has occurred behind closed doors, and many documents were redacted whole or in part. An attempt to give the public remote access to the trial through an audio feed was denied.

There’s also a lot that we’ll never see because it doesn’t exist or is legally protected. Google executives sometimes turned their chat histories off to avoid leaving a paper trail, or copied attorneys on emails they didn’t need to be on to keep them protected under attorney-client privilege. They also made sure not to use certain words that would get the attention of antitrust regulators. Google said that it has “produced over four million documents, including thousands of chats” over the course of this case.

“You get the impression that Google’s strategy for avoiding antitrust scrutiny is not to avoid engaging in antitrust violations, but to avoid talking about engaging in those antitrust violations,” Hepner said.

If one Google antitrust trial isn’t enough for you, you’re in luck: Google’s currently fighting another antitrust lawsuit in California over its Play store, and the trial over the DOJ’s other antitrust lawsuit against Google, over its digital advertising business, should begin in March of next year.

Judge Mehta’s verdict should come out early next year. If he finds in favor of the DOJ, we’ll get the next phase of the trial, where the judge decides what Google’s punishment should be. That could be anything from forbidding Google to making default search agreements to ordering the break-up of the company. Whatever happens, the verdict surely won’t be the last word in the case. No matter who wins or loses, Google’s big antitrust case will likely be appealed, possibly up to the Supreme Court.

Update, November 16, 10:15 am: This article was published on November 16 and has been updated to include comments from Google about ad pricing and documents.

Sourse: vox.com

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