Google Paid $26bn in 2021 to Secure Its Position As The Default Search Engine

In a federal antitrust trial, a slide made public revealed that Google paid a total of $26.3 billion in 2021 to secure its position as the default search engine on mobile phones and web browsers.

This figure provides a more detailed breakdown of the payments Google makes to various 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 that Google has unlawfully maintained its monopoly power in the general search market by using its dominance to exclude competitors from critical distribution channels, such as Apple’s Safari web browser.

While the $26.3 billion figure is not specific to any one company, Apple is likely the largest recipient. Analysts had estimated that Google could pay Apple as much as $19 billion in a given year for the default placement on Apple devices.

The Department of Justice’s complaint asserts that “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.”

Google has countered these claims by arguing that users have the option to change their default search engine with just a few clicks.

The slide presented in court, titled “Google Search+ Margins,” focused on Google’s search business. It indicated that the division’s revenue in 2021 exceeded $146 billion, with traffic acquisition costs (TAC) totaling more than $26 billion. The slide included data dating back to 2014 when Google reported approximately $47 billion in revenue for the division and paid around $7.1 billion for default status.

This signifies a threefold increase in revenue for Search+ between 2014 and 2021, while this portion of TAC costs nearly quadrupled.

Google routinely reports its total TAC, which encompasses payments to network partners for displaying ads on their platforms. The trial slide appeared to specifically address the portion of TAC related to Search+ revenue, distinct from the broader TAC figure reported in Google’s earnings.

While Google regularly reports its overall traffic acquisition costs, this figure also includes payments to network partners for displaying ads on their properties. The specific portion of these costs related to Google’s search division was represented in the slide disclosed during the trial.

This ongoing antitrust case has significant implications for Google and the tech industry at large, as it may lead to the drastic downsizing of the tech giant’s dominance of the search market.