Sundar Pichai Expresses Concern Over Visual Impact of Google’s Agreement With Apple

Years before becoming Google’s CEO, Sundar Pichai expressed concerns about the lack of choice in using the company’s web browser and its deal with Apple Inc., stating that it had negative “optics.”

Emails Pichai wrote in 2007 to Google founders Larry Page and Sergey Brin, among other executives, were introduced as evidence in the Justice Department’s antitrust lawsuit against Alphabet Inc.’s Google in Washington. The emails, written while Pichai was in charge of Google’s Chrome browser, show concern over the company’s agreement to pay Apple in exchange for being the default search option in the Safari browser.

“I know we’re asking for a default, but at the same time, I think we should encourage them to choose Yahoo or some other easy option,” Pichai wrote of the deal, which takes center stage. government case. “I don’t think it’s a good user experience and the optics aren’t good for us to be the only vendor in the browser.”

The Justice Department and state prosecutors allege that Google has paid Apple and smartphone makers, including Samsung Electronics Co., billions of dollars in revenue-sharing deals to block rival search engines from getting users. The agreements offer a percentage of Google’s revenue from search-based advertising in exchange for being the default tool on browsers and smartphones.

According to the Justice Department, Google pays more than $10 billion a year for these contracts, although the exact figures are confidential. Google denies the deals harm competition and says it’s easy for consumers to switch to alternatives if they want to.

Joan Braddi, Google’s vice president of product partnerships and a key negotiator of the Apple deal, was one of the executives copied in Pichai’s emails. The Ministry of Justice called him as a witness on Tuesday and asked about the exchange. Prosecutor Adam Severt also questioned whether the benefits of Google search are worth the costs of supporting Apple, the company’s biggest rival for mobile operating system software.

“I don’t know that we’ve ever looked at it that way,” said Braddi, who has worked at Google for 24 years and was among its first employees. The agreement between Google and Apple does not limit the iPhone maker’s use of the money, he said, adding that he was “certain” that Apple has used the payments to improve its iOS product, which competes with Google’s Android operating system.

Braddi negotiated Google’s original 2002 deal with Apple to make it the default search engine in the Mac’s Safari browser. The original deal included no money, but the companies amended it in 2005 to add a revenue share. The agreement was later extended to the iPhone in 2007 and the iPad in 2010.

In 2007, 2009 and 2012, Apple proposed changes to the agreement that would have given it “more flexibility” in default search settings, Braddi testified. In 2014, the companies signed another amendment that allowed Apple to use other search engines in some countries, Braddi said.

Today, Safari uses non-Google search engines in Russia, China and South Korea.

The 2014 amendment took 17 months to negotiate, Braddi said, because it included aspects related to intellectual property rights and mapping services. Google was concerned at the time that Apple might try to direct queries to other companies — such as Amazon.com Inc. or Yelp Inc. — in exchange for additional shares from those companies instead of sending searches to Google, according to 2013. email exchange between two companies.

That concern prompted Google to ask for a clause requiring Apple to use the search engine “in substantially the same way” it had before, he said, adding that it was not intended to prevent Apple from expanding its own services. .

Severt asked Brad I whether Google is paying “a significant amount of money” to Apple for Safari revenue sharing.

“It wasn’t always,” he said. “But today, yes.”

Since 2018, Google has been tracking Apple’s earnings calls and measuring how much the revenue share affects the iPhone maker’s bottom line, Braddi said. The exact figures are sealed. Braddi declined to say whether he would characterize the revenue share as a “significant” percentage of Apple’s operating income.

“I’m not a financial person,” he said.