A top executive from Google disclosed Friday (Oct. 27) during its antitrust trial that the company paid $26.3 billion in 2021 to secure default search engine deals on most smartphones and browsers.
This revelation marks the first time Google has publicly revealed the amount it spends to ensure its search service remains the go-to option for users, the Financial Times (FT) reported Friday.
The default agreements at the center of the Department of Justice’s case against Google are accused of unfairly shutting out rival search engines and allowing Google to maintain a search monopoly, according to the report. However, Google argues that most internet users voluntarily choose its search engine as the default option on their devices, even when the company doesn’t pay for the privilege.
The figure of $26.3 billion in default payments disclosed by Prabhakar Raghavan, Google’s head of search and advertising, highlights the significant investment Google makes to secure its dominant position in the search engine market, the report said. This amount has more than tripled since 2014.
These default payments constitute the largest single traffic acquisition cost for Google, per the report. In 2021, Google paid a total of $45.6 billion in traffic acquisition costs to other companies, with the default payments being the major component. The company’s search advertising revenue, which is driven in part by the volume of traffic, amounted to $146.4 billion in the same year.
While the trial is ongoing, analysts have raised concerns about the potential consequences if Google is banned from paying for positions as the default search engine, according to the report. Paradoxically, it could boost Google’s profits while negatively impacting other tech companies. For example, Google’s estimated payment to Apple alone for the current fiscal year exceeds $21 billion. If these payments were barred, it could significantly impact Apple’s services revenue, which amounted to $78 billion in the previous year.
The trial against Google is considered the most significant antitrust showdown with Big Tech since the Microsoft case in the 1990s, the report said. The court is expected to hear testimony from Google’s CEO, Sundar Pichai, next week.
In earlier testimony, Raghavan said Thursday (Oct. 27) that Google faces competition from various rivals that compete for users’ attention. To tackle this challenge, the firm is committed to innovation, with a dedicated team of about 8,000 engineers and product managers working on search.