Google CEO Sundar Pichai defends search deal with Apple in landmark antitrust trial

By Brian Fung, CNN

Washington (CNN) — Google CEO Sundar Pichai took the stand Monday to defend the search giant in the largest tech antitrust trial since the Microsoft case of the 1990s, marking a climactic moment in the US government’s weeks-long effort to prove that Google has illegally monopolized the online search market.

Pichai, whom Google called as a star witness, opened his testimony at the US District Court for the District of Columbia by recounting his journey from Chennai, India to Google and his path to becoming the tech company’s CEO in 2015.

Standing at a podium in a dark suit, crisp white shirt and gray tie, Pichai described how Google’s investments in Chrome, its proprietary web browser, accelerated users’ experiences with popular websites and led them to conduct more Google searches.

The history lesson is central to Google’s defense that the company’s search dominance owes to people preferring Google because it is the best, not because it behaved illegally to gain and preserve a monopoly.

Simply the best?

By making Google’s search engine a seamless part of the Chrome browser, and by offering users a minimalist design that created more room for search results and web content within a browser window, Google believed it would drive more search usage, Pichai testified.

“The correlation was pretty clear to see,” Pichai said, before Google attorney John Schmidtlein presented an internal email from 2010 showing research that users who switched from Microsoft’s Internet Explorer performed 48% more Google searches. Users of Mozilla’s Firefox browser that switched to Chrome performed 27% more searches on Google, the email said.

Pichai’s testimony represents Google’s attempt to rebut claims by rivals including Microsoft CEO Satya Nadella, who testified last month that Google has thwarted competition in search and risks dominating the artificial intelligence sector by training its large language models on search query data that it controls.

The US government case against Google focuses on the company’s web of contracts that make its search engine the default on millions of devices and browsers around the globe. Google has paid Apple more than an estimated $10 billion a year to be the default on Apple devices and software. In 2021, Google paid $26.3 billion to secure default agreements with its partners worldwide, according to a slide introduced in the trial last week.

Google pays Apple more money in search-default payments than it pays to any Android handset maker for search distribution, Pichai acknowledged, but “a big part of the difference” is that Google has separate deals with Android smartphone manufacturers and telecom carriers, whereas Apple “is both the [original equipment manufacturer] and they have control over their telecom channels,” making the Apple figure appear larger, he testified.

A key question throughout the trial has been why Google has seen fit to pay Apple and other search distribution partners such large sums if it is as easy as Google claims for users to switch search providers.

Asked that question point-blank by Google’s own lawyers, Pichai did not shy away from acknowledging a connection between a search engine’s default status and increased scale.

“Making it the default,” he said, “we know it would lead to increased usage of our products and services. There’s clearly value to that, and that’s what we were looking to do” with Google’s distribution deals.

Deals with big tech rivals

As Google has renegotiated its lucrative and notoriously opaque contract with Apple over the years — in 2016 and again in 2021 — Google moved to limit how Apple could treat search queries its users entered into its products, Pichai testified. Because Apple chooses which queries to refer to Google, and which it seeks to answer through Apple’s own search technology, Google feared that Apple might, for example, decide to send some search queries to Amazon.

“We wanted to make sure that as we contemplate a longer-term deal that the notion of default is implemented in a similar way” going forward, Pichai said, reflecting on his negotiations with Apple services chief Eddy Cue in 2016.

Later in Pichai’s testimony, the Justice Department tried to draw contrasts between Google’s strong desire to be the default search engine for millions of internet users on the one hand and its vocal objections to Microsoft appearing to make Bing the effective default search engine in Internet Explorer.

That year, Google sent Microsoft a lengthy letter outlining concerns about possible competition issues raised by Microsoft’s practice, according to an exhibit introduced in court.

“We are deeply concerned about the potential of harm to the competitive process from Microsoft’s actions,” Google wrote at the time, reminding Microsoft of its own past run-ins with antitrust regulators.

On Monday, a US government attorney pressed Pichai to acknowledge how the letter and other examples proved that Google considers search defaults to be extremely valuable — both financially and in terms of driving user search behavior generally.

But Pichai disputed any potential parallels between the two situations, describing Google’s deals as standard promotional agreements. Microsoft’s practice, he suggested, raised concerns because it did not adequately inform users of their opportunity to select a different search provider; instead, he said, Internet Explorer simply imported a user’s prior preference, and if the user had not made a selection, it would default to Bing.

A wary eye on Apple

Government lawyers sought to prove that Google feared Apple getting more involved in search, pointing to a 2019 email in which Pichai asked a subordinate to email him anytime an employee from Google’s search business left to work for Apple.

That specific request came as Pichai noted several employee departures and the recruitment efforts of John Giannandrea, a former Google search exec who went to oversee search efforts at Apple (and who has also testified in the trial). Apple has testified that it has always viewed Google as the best search engine for its users, even as it considered alternatives such as partnering with Microsoft on search or even buying Bing outright.

In the afternoon, Pichai acknowledged to the court: “There have been moments where people at Google have been concerned about Apple as a potential competitor” in search, without referencing any specific timeframe.

Regarding the 2019 email exchange, Pichai testified that his request — which also called for a monthly report on “all losses [of talent] to key competitors” — was an attempt to respond to pleas for help from Google’s search team amid more generalized fears of talent loss.

Pichai wryly added that he didn’t believe he ever received any of the reports he asked for.

Pichai bristled at suggestions by a lawyer representing a group of US states that Google may have paid Apple partly to keep it from entering the search market, saying instead that Google kept renewing the Apple agreement because the deal was beneficial on its own merits for Google’s search volume and ad revenues as well as for Apple users.

Tense dealings with Apple

The Apple-Google relationship has not always been perfectly smooth, Pichai testified. In December 2018, Pichai met with Apple CEO Tim Cook. (Pichai said that as part of the Apple agreement, he and Cook meet roughly annually to discuss their deal.) On the agenda: Cook’s concerns that Apple’s revenue growth linked to the deal did not appear to keep pace with Google’s.

Apple wanted to know what accounted for the difference, according to a Google summary of the nearly two-hour meeting entered into evidence Monday.

Google essentially told Apple at the meeting that any discrepancy was likely due to Apple’s own failings in search and not the fault of Google.

“Google is not in control of the amount or type of traffic received by Safari; Apple is,” Google argued in the meeting, according to the summary.

Though both companies continued to view the search deal as mutually beneficial, and Cook appeared “very motivated to work to find a good experience for our joint users,” Pichai testified, the meeting was also “tense” at times and some participants were “nervous” heading into it.

To help smooth things over, during the meeting Pichai proposed building a dedicated Google app or widget to be be preloaded on Apple’s iOS that could allow users to access Google search right from their home screens.

Cook “listened but did not react to this specifically other than noting we had different strengths,” the Google summary read.

Internal Google chats

US prosecutors also clashed with Pichai over Google’s handling of internal communications that it knew could end up being included in future litigation. In an extended exchange, DOJ pushed Pichai to explain a company policy that, until this February, automatically deleted employee chat messages older than 24 hours. The practice has been repeatedly flagged as allegedly evasive by Google’s critics.

Google’s chat policy was set in 2008 by the company’s legal team prior to his becoming CEO, Pichai explained to a government attorney. The attorney pointed out that Pichai made no effort to change the policy upon becoming CEO; Pichai agreed, saying it “was not a change that came to my attention.”

At one point, DOJ showed a 2021 chat log involving Pichai and his communications assistant in which he asked for chat history to be turned off, before deleting that request nine seconds later.

Pichai said he rarely, if ever, asks for chat history to be deactivated, and that in this case the chat conversation could have involved personal information related to a public event linked to Google’s cloud business for which he had been preparing.

The-CNN-Wire
™ & © 2023 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.