Google Search Default Payments Seem To Be The Opposite Of What You’d Expect For A Monopoly

I have no idea how the current Google antitrust trial will turn out, and frankly, I'm not sure it much matters. I mean, I'm sure it matters for Google, but I don't see how either outcome will change all that much for anyone else. I have noted, repeatedly, that I'm much more interested in a different Google antitrust trial, regarding how it handles ads. That one strikes me as more akin to a traditional antitrust case, in which it argues that Google used a dominant position in the ads market to be in a position to extract much greater rents from basically everyone.

That's the kind of thing you normally see that should raise antitrust concerns: situations where a company leverages a position to extract more money than it would have been able to otherwise in a competitive market.

And this is why I'm... confused by a lot of people getting really excited about the revelation last week that Google had paid $26.3 billion in 2021 to be the default search engine on Apple Safari, Mozilla Firefox, and in a few other places as well.

The US v. Google antitrust trial is about many things, but more than anything, it's about the power of defaults. Even if it's easy to switch browsers or platforms or search engines, the one that appears when you turn it on matters a lot. Google obviously agrees and has paid a staggering amount to make sure it is the default: testimony in the trial revealed that Google spent a total of $26.3 billion in 2021 to be the default search engine in multiple browsers, phones, and platforms.

That number, the sum total of all of Google's search distribution deals, came out during the Justice Department's cross-examination of Google's search head, Prabhakar Raghavan. It was made public after a debate earlier in the week between the two sides and Judge Amit Mehta over whether the figure should be redacted.

On social media, I saw a bunch of the usual crew of big tech haters" acting as if this were the smoking gun that basically sealed the deal, proving that Google violated antitrust law with these deals.

But, I'm having difficulty following this argument. First of all, this isn't a surprise. Long before all this was confirmed in court, journalists had reported that Google paid Apple between $15 billion and $20 billion to be the default search engine. All that really came out at trial is the actual number in 2021 was $18 billion (basically in the middle of the estimated range), and another $8 billion went to others.

More importantly, though, it strikes me that this massive payment would seem to... argue against the very crux of the trial, and not in favor of it? If Google were abusing its position as a dominant monopolist, then... shouldn't it be squeezing more money out of the deal than it deserved, not paying many, many billions of dollars?

In other words, if Google actually had an unassailable monopolistic position, why would it need to pay so much to keep its search engine as the default? Wouldn't it (as it has been credibly accused in the ads space) use that position to pay a lot less and keep a lot more of the money for itself?

The other part that remains unknown (at least publicly) is the nature of these deals. It seems like there's a decent chance that they're mostly revenue share deals: that is, whenever people do Google searches in Safari, if Google ads get clicked, then some of the ad revenue kicks to Apple. When put that way, it looks... kinda like a normal deal? It's not just Google handing Apple a big bag full of cash and saying keep us in the spotlight." It's Google saying if you send us traffic, we'll cut you in on some of the revenue we generate."

It's entirely possible that Google will lose this lawsuit, but I'm honestly perplexed by the idea that this payment revelation is a smoking gun against Google. It really seems like the opposite to me. It seems to show a big company paying for placement, which is... kinda a standard business practice?

I've made it clear I'd love to see more competition in the search space (I'm personally enjoying Kagl). But I'm left scratching my head as to how the arguments in this case make any sense at all.