Why Apple Has the Most to Lose From Google’s Fight with the Justice Department

Maybe the most revealing thing to come of the Justice Department’s lawsuit against Google is just how much of the search giant’s traffic comes from the deals it makes to be the default option for various devices. That’s not necessarily a surprise, but the sheer volume of search traffic that comes directly as a result of those arrangements hasn’t ever been made clear before now.

For example, Apple devices account for almost half of all Google search volume. Let that sink in, because it’s really quite extraordinary. 

It’s also why Apple might be the company with the most to lose here.

Apple has never revealed exactly how much money it generates by making Google the default search engine for Safari on the iPhone and in macOS. Most analysts believe it could be as much as $8-12 billion a year. That would represent a reasonable chunk of the total revenue generated by Apple’s services division, which Tim Cook has publicly said is an intense focus for the company.

The DOJ lawsuit backs that up that number, estimating it accounts for as much as 15 to 20 percent of Apple’s annual profit. That deal is easily the largest in both scope and pure dollar amount. 

It isn’t hard to see why Google would want to be sure people are using its search engine since its advertising platform, the largest in the world, is built on serving ads based on people’s queries. Spending money to make sure that Google, as opposed to Microsoft’s Bing, is the default option seems like smart business sense.

There’s probably a comparison to be made to the fact that Internet Explorer was the default web browser for Microsoft Windows, a fact that led to the most recent example of the government taking on big tech in a big way. That case, of course, didn’t do much to hold back Microsoft, now one of four companies worth more than a trillion dollars. The others, of course, being Google, Apple, and Amazon.

There’s some irony in the fact that the most lasting outcome of that previous attempt to rein in big tech is that instead of Microsoft’s Internet Explorer, Google’s Chrome became the dominant web browser, with around 70 percent market share.

Now, however, the question is whether those deals made by Google reflect anticompetitive arrangements that have illegally thwarted competition. Google’s Chief Legal Officer, Kent Walker, says that the arrangement with Apple is “no different from the agreements that many other companies have traditionally used to distribute software.” 

The fact that Google and Apple made such a deal in the first place is noteworthy on its own. The two companies haven’t exactly been friendly in the recent past. Steve Jobs was famously unhappy with Google after it released Android, which is a direct competitor to Apple’s iOS software. 

Apple also takes every opportunity it can to remind users that it treats their information different. Every time you hear Tim Cook say “we believe privacy is a fundamental human right,” it’s a direct dig at its competitors, especially Google and Facebook.

Of course, sometimes money can make us change the way we feel about our competition. Sometimes enough money can even turn those competitors into partners. 

As the Justice Department points out: “By paying Apple a portion of the monopoly rents extracted from advertisers, Google has aligned Apple’s financial incentives with its own and set the price of bidding for distribution extremely high.”