Google CEO acknowledges search default deals were ‘very valuable’

Sundar Pichai conceded that agreements making Google’s search engine the default on smartphones and browsers can be “very valuable”, as the Alphabet chief executive took the witness stand in the most significant monopoly trial in 25 years.

Pichai told the court on Monday that deals the company has struck with technology groups, smartphone makers and mobile telecoms companies – worth billions of dollars annually – when “done correctly ... can make a difference”.

He added: “There are scenarios where defaults are very valuable,” and that users also stand to benefit.

The US government has accused Google of illegally maintaining a monopoly by paying for agreements that ensure its search engine appears prominently on smartphones and browsers. The group has denied wrongdoing, arguing it is facing tough competition and that its market share is the result of the strength of its product, which consumers choose to use.

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The US Department of Justice had previously said that Google spends upwards of $10 billion (€9.4 billion) a year on default agreements, but a top executive revealed in testimony Friday that the group paid $26.3 billion on such deals in 2021.

Pichai is the most high-profile witness to take the stand in the landmark trial, which has entered its seventh week, since Microsoft chief executive Satya Nadella’s testimony earlier this month.

Microsoft has been featured in the trial as the most prominent tech company challenging Google’s dominance in internet search via its engine Bing. In his testimony, Nadella said Google’s default contracts render arguments that users have a choice in search “bogus”.

Prosecutors claimed Google was using the same practices that it had criticised when Microsoft used them in the early 2000s. DoJ lawyer Meagan Bellshaw on Monday cited a letter from Google sent as Microsoft was gearing up to launch a new version of its Internet Explorer browser in the 2000s. Google threatened legal action because Microsoft’s search engine would become the default in the new browser, and users would not be prompted to make a choice.

Under other agreements to make Google’s search engine the default in which it shares revenue from those queries, Google prohibits its partners from prompting users to select their own default search engine.

Pichai argued Microsoft at the time was not “honouring” user preference because Internet Explorer’s default settings were hidden. He added that Google does not prohibit user choice, “but if you are doing a commercial deal, we are paying for enhanced promotion”.

Bellshaw also cited an email by Google staff telling the group’s workforce in 2008 that its instant messaging would be set to “off the record” because the company was “in the midst of several significant legal and regulatory matters”.

Federal prosecutors have claimed Google hid evidence and destroyed documents for years. The company has said it has provided more than 5mn documents in the case and Pichai on Monday said that its employees’ potential humour, for instance, “may be misconstrued”.

The trial is the most serious antitrust case against Big Tech since the DoJ accused Microsoft in the 1990s of seeking to quash then-pioneering web browser Netscape with its Windows dominance. A judge ordered a break-up of Microsoft, but the ruling was ultimately overturned on appeal. – Copyright The Financial Times Limited 2023