The trial has helped clarify why so few tech giants have seriously tried to compete with Google in the search sector, where Google maintains a steady 90 percent market share. Apple had indeed considered the possibility, according to Giannandrea’s testimony, but had abandoned the idea to continue a lucrative revenue-sharing agreement with Google. Other major smartphone makers also maintain similar agreements with Google.
Equity research firm Sanford Bernstein estimates that Google will pay Apple up to $19 billion this year to set Google search as the default on iPhones and other devices, in a pact that Apple’s executives have rarely discussed in public.
The unsealing of the Apple transcript has been widely anticipated by trial watchers, after Judge Amit Mehta announced it days earlier. Giannandrea had originally testified for only around 10 minutes publicly before the rest of his session was sealed.
The Google trial is the Justice Department’s first antitrust case against a major tech company in more than two decades. The hearings had drawn blowback for their secrecy, before Mehta and Google reversed course to make more of the testimony public.
Giannandrea’s testimony reflects that extensive consideration took place within Apple about whether they could take on Google by launching their own search engine. For one thing, he said, Apple had begun peeling off a modest number of search queries from its Safari search engine by “intercepting” them with its “Safari Suggestions” feature, instead of passing all the queries straight to Google.
“The way I think about it is that we are getting the first bite at the apple, so to speak,” Giannandrea said on the stand Sept. 22. “We’re intercepting every query you’re trying to do and trying to decide whether we can help.”
Giannandrea also said Apple met with Microsoft in 2018 to discuss the possibility of acquiring its Bing search engine. He said the talks were closely held at the time, as “it’s hard to operate something if you know you’re about to be sold.” A Bing acquisition, a joint venture with Microsoft and other options, were presented to Apple CEO Tim Cook in a slide deck at the time.
Giannandrea said that, after evaluating their options, he came to the “definitive opinion” that Apple should not proceed with an acquisition of Bing. Cook told Microsoft they were rejecting the deal.
The transcript also reflected Apple leveraging Microsoft’s Bing as a bargaining chip as it negotiated its revenue-share agreement with Google. “We build them [Microsoft] up, create incremental negotiating leverage to keep the take rate from Google, and further our optionality to replace Google down the line,” Adrian Perica, an Apple vice president, wrote in an internal email that a Justice Department prosecutor read aloud at the trial.
