Pichai Stands Up for Google’s Search Preeminence as Competitors Close In

On Monday, Sundar Pichai, the CEO of Alphabet Inc., testified in court to defend Google against antitrust charges brought by the US government. Pichai aimed to convey that Google’s position as the leading internet search engine is consistently under threat from competitors like Apple Inc.

The Justice Department alleges that by paying up to $26 billion in 2021 to default on cellphones, computers and other devices, Google has unfairly stifled potential competitors such as Microsoft Corp. and DuckDuckGo. Even Apple has decided not to create its own search engine or prioritize other options because of its lucrative multibillion-dollar deal with Google, the government claims. G

Despite holding roughly 90% of the search market, Google has tried to demonstrate over the past seven weeks that it is increasingly at the mercy of the new ways in which people search for information online. Previous Google witnesses have described how people are now more likely to look for things to buy on TikTok or Amazon.com Inc or travel advice on Expedia Group Inc.

In his first court appearance, Pichai said that when Google’s long-standing contract with Apple was renegotiated in 2016, he wanted to make sure the default was “maintained” as it had been for years. He worried that Apple could otherwise start sending queries from its Safari browser to Amazon or others “and enter into additional contracts” instead of routing the query through a Google search, for example.

An email from 2018, written before a meeting between Pichai and Apple CEO Tim Cook and presented at trial, showed that Google was concerned about Apple “cannibalizing the survey.”

Apple’s default agreement with Google is by far the most significant because of the iPhone’s market share. The exact amount of the deal is not public, although the Justice Department previously said Google will pay Apple $4 billion to $8 billion a year. In 2016, Pichai was Google’s chief negotiator with Apple and helped seal the partnership, which included a stipulation that both would “support and defend” the deal against antitrust enforcement, a top Apple executive testified earlier in the lawsuit.

“We pay some of our money based on the value we see,” Pichai said, including “enhanced Google search promotion.”

In one email Apple executive Eddy Cue sent to Pichai during negotiations in 2016, the pair discussed a possible agreement not to promote Google Chrome to Safari users on Macs. Pichai said that Google ultimately did not agree to this, noting that browsers are one area, along with maps, where Google and Apple compete.

During Pichai’s cross-examination, a Justice Department lawyer tried to show how hard Google worked to appease Apple in its search partnership. In 2018, Pichai and Cook met to address Apple’s concerns that its share of Google search revenue was not growing as fast as Google’s publicly reported search revenue.

Notes of the meeting shown in court read: “Sundar also made it very clear that you send us inquiries and we do our best to answer them (and monetize them) – always in good faith and because our incentives are aligned.” Another point in the notes pointed to Google’s collaboration with Apple on search: “Our vision is that we operate as if we were one company.”

“I don’t remember saying that line,” Pichai testified.

The Justice Department claims that Google knows that most people won’t change their default settings even when other options are available. Earlier in the lawsuit, Google attorney John Schmidtlein said the company’s default contracts were strictly based on merit and that users could change their preferences and choose a different search engine “within seconds.”

Pichai said Google built the Chrome browser and Android smartphone operating system to help consumers use the web more easily — and use the company’s search engine “more seamlessly.” Android “has helped bring hundreds of millions of people online,” he said. Google realized that “the better web experience you make, they would use the web more. They would search the web more.”

The 51-year-old CEO has a long history at Google, where he has held various positions, including helping to design the Android strategy and directing the development of the Chrome browser. Dressed in a black suit and standing at a podium instead of sitting, Pichai said Google is allowing other companies to use the technology behind the Chrome browser and Android for free. Microsoft’s Edge browser is based on Google technology, and hundreds of products use Android, from phones to computers and fitness equipment made by Peloton Interactive Inc., he said.

The government has grilled past witnesses about why Google, which has a significant market share, would have to pay Apple and others billions of dollars in default if its product is so good that people would choose it over other offerings anyway. The answer, the government has so far suggested, is that Google has used its prime position to extract more money from advertisers — often by making opaque changes to the rules that govern the ad auctions in which the companies participate.

In government emails released so far, Pichai has been shown expressing concern about making Google the default and favoring choice. In 2007, Pichai wrote in internal emails to colleagues that Google’s exclusivity with Apple had bad “optics” and that they should encourage Apple to offer Yahoo as an option in the drop-down menu. “I don’t think it’s a good user experience, and the optics aren’t good that we’re the only editor in the browser,” he wrote, according to an email presented at trial.

Judge Amit Mehta is not expected to rule until next year, and the case is likely years away from resolution. If the Ministry of Justice wins, an appeal will be filed and a possible second trial will be organized to find legal remedies.