Google paid $26 billion in 2021 to become the default search engine on browsers and phones
Google CEO Sundar Pichai (L) and Apple CEO Tim Cook (R) listen as U.S. President Joe Biden speaks during a roundtable with American and Indian business leaders in the East Room of the White House in Washington, D.C., on June 23, 2023.
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Google paid $26.3 billion to be the default search engine on mobile phones and web browsers in 2021, according to a slide made public Friday in a federal antitrust trial against the company.
The number is a more granular look into how much Google pays partners, including Apple, to be the default search engine on their products. The U.S. Department of Justice and a coalition of state attorneys general have argued in the case that Google has illegally maintained its monopoly power in general search by leveraging its dominance to lock rivals out of key distribution channels, such as Apple’s Safari web browser.
The $26.3 billion figure does not represent the payments to any one company, but Apple likely represents the largest recipient. Bernstein previously estimated Google could pay Apple as much as $19 billion this year for the out-of-the-box default placement on Apple devices.
“Google pays billions of dollars each year to distributors—including popular-device manufacturers such as Apple, LG, Motorola, and Samsung; major U.S. wireless carriers such as AT&T, T-Mobile, and Verizon; and browser developers such as Mozilla, Opera, and UCWeb—to secure default status for its general search engine and, in many cases, to specifically prohibit Google’s counterparties from dealing with Google’s competitors,” the DOJ complaint reads.
Google has argued that users can still opt to change their default search engine with a few clicks.
According to the slide shown in court Friday — titled “Google Search+ Margins,” which primarily refers to Google’s search business — that division’s 2021 revenue was more than $146 billion, while the portion of traffic acquisition costs was more than $26 billion.
The slide included numbers dating back to 2014, when Google booked revenue of roughly $47 billion for the division and paid about $7.1 billion for the default status. That means revenue for Search+ roughly tripled between 2014 and 2021, while this portion of TAC costs nearly quadrupled.
While Google regularly reports overall TAC, that number also includes the amount Google pays to network partners for ads shown on their properties, according to its 10-K filing with the U.S. Securities and Exchange Commission.
The other portion of the overall TAC figure Google reports in earnings consists of the payments it makes to “distribution partners who make available our search access points and services,” according to the 10-K. Google says its “distribution partners include browser providers, mobile carriers, original equipment manufacturers and software developers.” This is the portion of TAC that appeared to be represented by the slide, which referred only to Search+ revenue.
A Google spokesperson declined to comment. An Apple spokesperson did not immediately respond to CNBC’s request for comment.
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An ex-Meta employee sued the social media company on Monday over allegations that its WhatsApp messaging service contained “systemic cybersecurity failures” that potentially compromise user privacy.
Attaullah Baig, WhatsApp’s former head of security, alleged that Meta retaliated against him after he notified leaders, including CEO Mark Zuckerberg, of security issues at the messaging app.
The suit, filed in U.S. District Court for the Northern District of California, claims that after joining WhatsApp in 2021, Baig found security flaws that violated federal securities laws and Meta’s legal obligations related to a 2020 privacy settlement with the Federal Trade Commission.
During a test conducted with Meta’s central security team, Baig alleged he “discovered that approximately 1,500 WhatsApp engineers had unrestricted access to user data, including sensitive personal information” and that the employees “could move or steal such data without detection or audit trail.”
A Meta spokesperson disputed Baig’s allegations in a statement, and downplayed his role and ranking at the company.
“Sadly this is a familiar playbook in which a former employee is dismissed for poor performance and then goes public with distorted claims that misrepresent the ongoing hard work of our team,” the spokesperson wrote. “Security is an adversarial space, and we pride ourselves in building on our strong record of protecting people’s privacy.”
Baig is being represented by the whistle blower organization Psst.org and the law firm Schonbrun, Seplow, Harris, Hoffman and Zeldes.
Although the lawsuit doesn’t claim that any user data was compromised, it says that Baig told superiors on multiple occasions that the cybersecurity failures posed a regulatory compliance risk. Some of the alleged security flaws include WhatsApp’s failure to maintain a 24-hour security operations center fitting of its size and scale, systems to monitor user data access and a “a comprehensive inventory of systems storing user data, preventing proper protection and regulatory disclosure.”
Baig’s attorneys claim in the suit that there were multiple instances of his superiors criticizing his work, and said that within three days of his initial “cybersecurity disclosure,” he began receiving “negative performance feedback.”
In November, Baig notified the SEC of the alleged “cybersecurity deficiencies and failure to inform investors about material cybersecurity risks,” the suit says.
A month later, Baig sent Zuckerberg the second of two letters, this time informing the CEO that he “had filed the SEC complaint” and that he was “requesting immediate action to address both the underlying compliance failures and the unlawful retaliation.”
In January, Baig then filed a complaint with the Occupational Safety and Health Administration, documenting “the systemic retaliation” he claims he received after the security disclosures, according to the lawsuit.
The following month, the complaint says Meta fired Baig, citing “poor performance” as part of the company’s February round of layoffs affecting 5% of staff.
“The timing and circumstances of Mr. Baig’s termination establish clear causal connection to his protected activity, occurring in close temporal proximity to his external regulatory filings and representing the culmination of over two years of systemic retaliation for his cybersecurity disclosures and advocacy for compliance with federal law and regulatory orders,” the suit says.
Baig’s lawyers said that he submitted a notice to remove his SEC-related claims to federal court on Monday, and that he has “exhausted his administrative remedies prior to bringing this action.”
WATCH: Meta pushes back on ban on WhatsApp on devices used by House of Representatives.
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