Alphabet CEO Sundar Pichai defends Google’s search deals in antitrust trial
Google and Alphabet Inc. CEO Sundar Pichai arrives at the federal courthouse in Washington, Monday, Oct. 30, 2023.
Jose Luis Magana | AP
Google CEO Sundar Pichai defended the company’s agreements to make its search engine the default on web browsers and phones, addressed the government’s allegations that it destroyed chat messages and described the company’s complicated relationship with Apple, during testimony in D.C. District Court on Monday.
The testimony was the first opportunity for government attorneys to press Alphabet’s top executive in open court on the company’s actions to secure its dominant position in online search. The Department of Justice and a coalition of state attorneys general are seeking to prove that Google has sought to lock out rivals from key distribution channels for search through exclusive deals with phone manufacturers and web browser-makers.
For the last month and a half of the trial, the government has been working to make its case that Google’s actions violate antitrust law through illegal monopoly maintenance. The lack of competition in general search tools, the government argues, deprives consumers of improved quality and choice.
The government’s cross-examination of Pichai on Monday highlighted how Google has contended with the possibility of losing out on key distribution channels when it was a much smaller company.
The government has claimed that Google unfairly cuts off rivals from places where consumers could find them by paying billions to secure its own search engine as the default on many access points. That, the government seemed to be arguing, is very similar to what Google railed against Microsoft for doing back in 2005.
At the time, Microsoft had announced the latest version of its web browser, Internet Explorer 7 (IE7). In that version, Microsoft planned to build search into its toolbar so that users did not need to download separate extensions to search from that part of the browser. The search engine for that module would be determined by whatever users picked in the previous version of IE.
But Google was concerned that it was too hard for users to find the setting to change the default search engine on IE7, so Microsoft’s own default engine would likely be the one to receive most of the queries entered through the new browser toolbar. Pichai testified that to his knowledge, “not a single user” used the IE setting in the earlier version of the browser to change the search engine from Microsoft’s.
While Google has argued in its own defense that users can easily switch their default search engine on browsers and phones if they so choose, Google’s then-Chief Legal Officer David Drummond wrote to Microsoft’s then-General Counsel Brad Smith in a 2005 letter, “As you know, most end users do not change defaults.”
That line hits at a key element of the government’s argument: that while it may be possible for users to switch their search engine on the Safari browser on the iPhone, for example, few actually do.
In defense, Pichai said Drummond’s statement was specific to the way Microsoft was implementing defaults on its browser.
“By pushing out an update of IE with a new search box that will default to Microsoft’s own search product in the vast majority of cases, Microsoft would gain a large number of search users for reasons having nothing to do with the merits of Microsoft’s search offering,” Drummond wrote at the time.
Google had “proposed instead that users be prompted to select the default search provider the first time they use the inline search feature,” Drummond wrote in the 2005 letter.
Pichai said the request reflected what Google saw as “a unique egregious case of how they were not honoring user preference at all,” because it didn’t reflect how users actually engaged with search engines.
Department of Justice attorney Meagan Bellshaw contrasted the request with Google’s approach to choice screens under its own revenue-sharing contracts with phone manufacturers.
Pichai testified that Google does not prohibit choice screens, but conceded that for phone manufacturers who agree to the revenue sharing agreement (RSA), providing a choice screen for the search engine would not be consistent with the agreement. He said that when doing a commercial deal like the RSA, “we are paying for enhanced promotion.” He added that phone manufacturers “have the option not to take the RSA.”
Later, Bellshaw showed a 2007 presentation from a Google employee who helped negotiate revenue-sharing deals. One slide said that “What Apple wants” is for Google to be one of two search provider options. Pichai said this was specifically for a version of Safari on PCs.
Notes from a 2007 meeting showed that Google was aware of the power of defaults. According to those notes, someone asked how much of a difference default status makes. The answer: “Typically 75% take rate. Defaults have strong impact.”
Relationship between Google and Apple
Pichai worried about losing employees to competitors, including Apple, the DOJ argued.
Bellshaw presented a 2019 email from Pichai, which the CEO said summarized another executive’s concerns with recent turnover. Pichai asked for “monthly reports of all losses to key competitors on an ongoing basis.” But if anyone from the search team went to Apple, he asked to be notified for each case.
Pichai said he wasn’t sure if he’d actually received those reports.
Bellshaw also tried to press Pichai on Google’s close relationship with Apple when it came to their search deal, while they competed in other realms like the smartphone market.
In notes from a 2018 meeting that included Pichai and Apple CEO Tim Cook, a Google executive recounted that Google expressed, “Our vision is that we work as if we are one company.” Pichai testified that he did not recall saying that line. He added that coming out of that meeting, during which Apple wanted to discuss concerns about revenue growth deceleration on Safari under their existing deal, “there was some what I would call irrational exuberance.”
In 2021, Pichai approved an extension of the 2016 deal with Apple.
On Friday, the court learned that Google paid $26.3 billion in 2021 to be the default search engine on mobile phones and web browsers. That number includes how much it pays to Apple, as well as other companies.
Deleted chats
The DOJ also addressed Google’s policy of not automatically retaining internal chat messages, despite being subject to a litigation hold. In February, the DOJ alleged that Google “systematically destroyed” instant message chats through its history-off option that allowed them to be deleted every 24 hours unless a user manually changed the setting.
Pichai acknowledged he was aware of the history-off default for chat that persisted until February and that he had taken action to change that.
Bellshaw pointed to a message exchange where Pichai asked for history to be turned off in a group chat in 2021. Pichai testified that he did so to discuss a personnel matter, along the lines of who would be a good speaker at an event. It was not something even “remotely” close to something covered by the litigation hold, he said.
“I take great care to comply with all litigation holds,” Pichai testified.
Bellshaw also asked if Pichai would mark documents or messages as attorney-client privileged and copy Google’s Chief Legal Officer Kent Walker, even when he wasn’t explicitly seeking legal advice. Pichai said no.
Bellshaw pointed to Pichai’s 2022 deposition, where he conceded it was possible that on occasion he accidentally included Walker and asked for advice, when he was really seeking to mark something as confidential.
Bellshaw also returned to the earlier letter Drummond sent to Smith in 2005 about IE7. In the letter, Drummond said legal action was a “foreseeable possibility” and asked Microsoft to “take care to retain all past and future records relating to any plans to tie search to any Microsoft product or otherwise deprive consumers of competitive choice and search.”
WATCH: DOJ takes on Google in historic antitrust lawsuit over search dominance
Tesla CEO Elon Musk speaks alongside U.S. President Donald Trump to reporters in the Oval Office of the White House on May 30, 2025 in Washington, DC.
Kevin Dietsch | Getty Images
At Tesla, vehicle sales are slumping, profits are thinning and revenue from regulatory credit sales are poised to dry up due to Republican-led policy changes.
In the past, CEO Elon Musk’s futuristic promises have convinced investors to look past top and bottom line numbers.
Not now.
Following another fairly dismal earnings report this week, Musk told analysts on the call that Tesla’s electric vehicles will soon become driverless, making money for owners while they sleep. He also said Tesla’s robotaxi service, which the company recently started testing in a limited capacity in Austin, Texas, will expand to other states, with a goal of being able to reach half the U.S. population by year-end, “assuming we have regulatory approvals.”
It didn’t matter.
Tesla shares plummeted 8% on Thursday as investors focused on the immediate challenges facing the company, including the rapid rise of lower-cost EV competitors, particularly in China, and a political backlash against Musk that harmed Tesla’s brand in the U.S. and Europe.
Automotive sales declined 16% year-over-year in the second quarter for the EV maker, with weak sales numbers continuing in Europe and California. Musk said there could be a “few rough quarters” ahead because of the EV credits expiring and President Donald Trump’s tariffs.
The stock bounced back some on Friday, gaining 3.5%, but still ended the week down and has now fallen 22% this year, the worst performance among tech’s megacaps. The Nasdaq rose 1% for the week and is up more than 9% in 2025, closing at a record on Friday.
“Look, we love robotaxis. And robots,” wrote analysts at Canaccord Genuity, who recommend buying Tesla’s stock, in a note after the earnings report. “Over time, Tesla is well positioned to benefit from these future-forward opportunities.”
The analysts, however, said that they’re focused on the profit and loss statement, writing: “But we love growth too, in the here and now. We need the P&L dynamics to turn.”
Analysts at Jefferies described the earnings update as “a bit dull.” And Goldman Sachs said Tesla’s robotaxi effort is “still small” with limited technical data points.
Tesla didn’t respond to a request for comment.
Musk, who has previously called himself “pathologically optimistic,” has been able to sway shareholders and send the stock soaring at times with promises of self-driving cars, humanoid robots and more affordable EVs.
But after a decade of missed self-imposed deadlines on autonomous driving, Wall Street is watching Tesla fall behind Alphabet’s Waymo in the U.S. and Baidu’s Apollo Go in China.
In Tesla’s shareholder deck, the company said the second quarter marked the start of its “transition from leading the electric vehicle and renewable energy industries to also becoming a leader in AI, robotics and related services.” The company didn’t offer any new guidance for growth or profits for the year ahead.
Regulatory hurdles
Business Insider reported on Friday that Tesla told staff its robotaxi service could launch in the San Francisco Bay Area as soon as this weekend.
But Tesla hasn’t applied for permits that would be required to run a driverless ridehailing service in California, CNBC confirmed. The company would first need authorizations from the state’s Department of Motor Vehicles and the California Public Utilities Commission (CPUC).
The CPUC told CNBC on Friday, that under existing permits, Tesla can only operate a human-driven chartered vehicle service, not carry passengers in robotaxis.
Waymo driverless vehicles wait at a traffic light in Santa Monica, California, on May 30, 2025.
Daniel Cole | Reuters
On the earnings call, Musk and other Tesla execs claimed the company was working on regulatory approvals to launch in Nevada, Arizona, Florida and other markets, in addition to San Francisco, but offered no details about what would be required.
Within Austin, the company said its robotaxi service had driven 7,000 miles, and that Tesla has been restricting its robotaxis’ to roads with a speed limit of 40 miles per hour. The Austin service involves a small fleet of about 10 to 20 Model Y vehicles equipped with the company’s latest self-driving systems.
The Tesla robotaxis rely on remote supervision by employees in a customer service center, and a human safety supervisor in the front passenger seat, ready to intervene if needed.
Compare that to what Alphabet said on its second-quarter earnings call the same day as Tesla’s results.
“The Waymo Driver has now autonomously driven over 100 million miles on public roads, and the team is testing across more than 10 cities this year, including New York and Philadelphia,” Alphabet said. Meanwhile, Waymo has become significant enough that Alphabet added a category to its Other Bets revenue description in its latest quarterly filing.
“Revenues from Other Bets are generated primarily from the sale of autonomous transportation services, healthcare-related services and internet services,” the filing said. The Other Bets segment remains relatively small, with revenue coming in at $373 million in the quarter.
Regardless of investor skepticism, Musk is more bullish than ever.
On Friday, the world’s richest person posted on his social network X that he thinks Tesla will someday be worth $20 trillion. On the earnings call earlier in the week, he said that when it comes to AI for cars and robots, “Tesla is actually much better than Google by far” and “much better than anyone at real world AI.”
CORRECTION: The Waymo Driver has now autonomously driven over 100 million miles on public roads, according to Alphabet. A previous version misstated the number of miles.
WATCH: Tough quarter for Tesla
A vehicle Tesla is using for robotaxi testing purposes on Oltorf Street in Austin, Texas, US, on Sunday, June 22, 2025.
Tim Goessman | Bloomberg | Getty Images
In an earnings call this week, Tesla CEO Elon Musk teased an expansion of his company’s fledgling robotaxi service to the San Francisco Bay Area and other U.S. markets.
But California regulators are making clear that Tesla is not authorized to carry passengers on public roads in autonomous vehicles and would require a human driver in control at all times.
“Tesla is not allowed to test or transport the public (paid or unpaid) in an AV with or without a driver,” the California Public Utilities Commission told CNBC in an email on Friday. “Tesla is allowed to transport the public (paid or unpaid) in a non-AV, which, of course, would have a driver.”
In other words, Tesla’s service in the state will have to be more taxi than robot.
Tesla has what’s known in California as a charter-party carrier permit, which allows it to run a private car service with human drivers, similar to limousine companies or sightseeing services.
The commission said it received a notification from Tesla on Thursday that the company plans to “extend operations” under its permit to “offer service to friends and family of employees and to select members of the public,” across much of the Bay Area.
But under Tesla’s permit, that service can only be with non-AVs, the CPUC said.
The California Department of Motor Vehicles told CNBC that Tesla has had a “drivered testing permit” since 2014, allowing the company to operate AVs with a safety driver present, but not to collect fees. The safety drivers must be Tesla employees, contractors or designees of the manufacturer under that permit, the DMV said.
In Austin, Texas, Tesla is currently testing out a robotaxi service, using its Model Y SUVs equipped with the company’s latest automated driving software and hardware. The limited service operates during daylight hours and in good weather, on roads with a speed limit of 40 miles per hour.
Robotaxis in Austin are remotely supervised by Tesla employees, and include a human safety supervisor in the front passenger seat. The service is now limited to invited users, who agree to the terms of Tesla’s “early access program.”
On Friday, Business Insider, citing an internal Tesla memo, reported that Tesla told staff it planned to expand its robotaxi service to the San Francisco Bay Area this weekend. Tesla didn’t respond to a request for comment on that report.
In a separate matter in California, the DMV has accused Tesla of misleading consumers about the capabilities of its driver assistance systems, previously marketed under the names Autopilot and Full Self-Driving (or FSD).
Tesla now calls its premium driver assistance features, “FSD Supervised.” In owners manuals, Tesla says Autopilot and FSD Supervised are “hands on” systems, requiring a driver at the wheel, ready to steer or brake at all times.
But in user-generated videos shared by Tesla on X, the company shows customers using FSD hands-free while engaged in other tasks. The DMV is arguing that Tesla’s license to sell vehicles in California should be suspended, with arguments ongoing through Friday at the state’s Office of Administrative Hearings in Oakland.
Under California state law, autonomous taxi services are regulated at the state level. Some city and county officials said on Friday that they were out of the loop regarding a potential Tesla service in the state.
Stephanie Moulton-Peters, a member of the Marin County Board of Supervisors, said in a phone interview that she had not heard from Tesla about its plans. She urged the company to be more transparent.
“I certainly expect they will tell us and I think it’s a good business practice to do that,” she said.
Moulton-Peters said she was undecided on robotaxis generally and wasn’t sure how Marin County, located north of San Francisco, would react to Tesla’s service.
“The news of change coming always has mixed results in the community,” she said.
Brian Colbert, another member of the Marin County Board of Supervisors, said in an interview that he’s open to the idea of Tesla’s service being a good thing but that he was disappointed in the lack of communication.
“They should have done a better job about informing the community about the launch,” he said.
Alphabet’s Waymo, which is far ahead of Tesla in the robotaxi market, obtained a number of permits from the DMV and CPUC before starting its driverless ride-hailing service in the state.
Waymo was granted a CPUC driverless deployment permit in 2023, allowing it to charge for rides in the state. The company has been seeking amendments to both its DMV and CPUC driverless deployment permits as it expands its service territory in the state.
— NBC’s David Ingram reported from San Francisco.
WATCH: Waymo testing self-driving cars with human drivers in New York and Philadelphia
Meta CEO Mark Zuckerberg makes a keynote speech during the Meta Connect annual event, at the company’s headquarters in Menlo Park, California, on Sept. 25, 2024.
Manuel Orbegozo | Reuters
Meta CEO Mark Zuckerberg on Friday said Shengjia Zhao, the co-creator of OpenAI’s ChatGPT, will serve as the chief scientist of Meta Superintelligence Labs.
Zuckerberg has been on a multibillion-dollar artificial intelligence hiring blitz in recent weeks, highlighted by a $14 billion investment in Scale AI. In June, Zuckerberg announced a new organization called Meta Superintelligence Labs that’s made up of top AI researchers and engineers.
Zhao’s name was listed among other new hires in the June memo, but Zuckerberg said Friday that Zhao co-founded the lab and “has been our lead scientist from day one.” Zhao will work directly with Zuckerberg and Alexandr Wang, the former CEO of Scale AI who is acting as Meta’s chief AI officer.
“Shengjia has already pioneered several breakthroughs including a new scaling paradigm and distinguished himself as a leader in the field,” Zuckerberg wrote in a social media post. “I’m looking forward to working closely with him to advance his scientific vision.”
In addition to co-creating ChatGPT, Zhao helped build OpenAI’s GPT-4, mini models, 4.1 and o3, and he previously led synthetic data at OpenAI, according to Zuckerberg’s June memo.
Meta Superintelligence Labs will be where employees work on foundation models such as the open-source Llama family of AI models, products and Fundamental Artificial Intelligence Research projects.
The social media company will invest “hundreds of billions of dollars” into AI compute infrastructure, Zuckerberg said earlier this month.
“The next few years are going to be very exciting!” Zuckerberg wrote Friday.
WATCH: Meta announces massive ‘Prometheus’ & ‘Hyperion’ data center plans
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