WASHINGTON (CN) — A federal judge heard testimony on Tuesday from senior Apple executive Eddy Cue in the government’s landmark antitrust case against Google, with questions centered on the two tech giants’ revenue-sharing agreement that makes Google the default search engine on Apple devices.
Thus far in the trial, now in its third week, the Justice Department has characterized Google as a behemoth that dominates the internet search industry by stamping out its competition and shelling out billions of dollars to make itself the default search engine on devices — a monopoly on par with the oil barons of old.
U.S. District Judge Amit Mehta, a Barack Obama appointee, has heard testimony from several tech executives since the bench trial began on Sept. 12, and will continue to hear more over the next six or so weeks before determining whether Google broke the law. If he does, a second trial will begin to determine the appropriate remedy.
Justice Department prosecutors have said Apple’s relationship with Google is a central issue in the trial, considering its status as both the richest company in the world and Google’s “chief search distribution partner.”
Cue, the senior vice president of services at Apple, oversees some of the company’s most popular products like Apple Music, Apple Podcasts, Maps, search ads and other services. He testified that the revenue-sharing agreement between the two companies is mutually beneficial.
Justice Department prosecutor Christine Sommer asked Cue a series of questions about negotiations between the companies to renew the agreement, pointing to communications between Cue, Apple CEO Tim Cook and Google CEO Sundar Pichai that revealed a disagreement over Apple’s revenue cut.
Sommer did not explicitly use the actual percentages the companies were negotiating over — Google and many of the involved tech companies have moved to keep most exhibits under seal to protect sensitive trade information — but the companies ultimately agreed on a new number that resulted in Apple getting “its fair share.”
Cue said that while Apple wanted to renegotiate to get better terms, the idea of ending the agreement and therefore Google’s default status on Safari browsers wasn’t even considered.
He added that Apple has long viewed Google’s search engine as the best product on the market and resisted adding a choice screen for users to select their preferred search engine when first opening the Safari browser — like it does in Russia, China and South Korea — because most users would likely be unfamiliar with Google’s competitors like DuckDuckGo or Ecosia.
“We think we’ve done right by our customers,” Cue said.
Sommer also asked whether the revenue-sharing agreement contractually obligates Cue and other Apple executives to defend the deal, but Cue hedged and said lawyers for either company would be better suited to answer.
John Scmidtlein, Google’s lead defense attorney of the firm Williams & Connolly, used his time for cross-examination to highlight how Safari users are still able to change their default search engine.
Cue reinforced that in his answers, saying that the process is not complicated and easily manageable for anyone familiar with their phone.
“If you know how to set your Wi-Fi, you know how to change your search engine,” Cue said.
Cue’s testimony is the second from an Apple executive. John Giannandrea, head of Apple AI and a former Google executive, testified almost entirely behind closed doors with only about 15 minutes of public testimony.
Apple had fought to keep Cue, Giannandrea and Adrian Perica — Apple’s vice president of corporate development who has yet to testify — out of federal court, arguing in a motion to quash the government’s subpoenas that the company had been “the subject of uncharacteristically overbroad and burdensome demands.”
The company noted it had already produced about 125,000 documents and provided over 21.5 hours of deposition testimony from the three.
The Justice Department also called Mikhail Parakhin, the CEO of advertising and web services for Microsoft and the former chief technology officer for Yandex, the leading search engine in Russia, to the stand Tuesday afternoon.
He described how a successful search engine creates a feedback loop, where high-quality search results lead to more users, which leads to more clicks, which leads to more data, which attracts more advertisers, which then loops back to better results and continues again.
The loop also guides the activities of web designers, who optimize their sites to appear in Google searches rather than waste time optimizing their sites for less popular search engines. The same goes for business owners, who will make sure their store hours and website are correct on Google rather than on Bing or Yahoo, according to Parakhin.
For a company like Google, which conducts over 91% of all internet searches, its feedback loop is leaps and bounds more effective — and therefore more lucrative — than its next closest competitor Bing, which runs about 3% of searches as of August 2023.
For companies that aren't Google, their feedback loop works the opposite direction, Parakhin said, leading to fewer users, traffic, data and advertisers as more users go to dominant search engines like Google.
"It's a vicious spiral," Parakhin said.Follow @Ryan_Knappy
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