According to a recent report by the UK Competition and Markets Authority, Google paid £1.2 billion (or around $1.5 billion) across 2019 to secure its place as the default search engine in devices across the market, the “substantial majority of which” was paid to Apple. That’s a huge sum, and rival search engines claim it makes competition impossible — they simply can’t afford to be in contention with numbers that high.
The full report is a monumental 437 pages long, covering quite a lot of details, and while it does touch on other tech giants like Facebook, the bulk of the report takes aim at Google. It points out a lot of issues, like ecosystem lock-in and potential abuse of user data, but it also makes a few more specific claims regarding the anti-competitive nature of Google’s flagship Search product, arguing that “Google’s extensive default positions across devices and browsers, and in particular on almost all mobile devices in the UK, act as a barrier to expansion for other search engines.” Furthermore, the Authority explicitly believes that arrangements like the one it has with Apple are against consumer interests: “Apple’s existing arrangements with Google create a significant barrier to entry and expansion for rivals affecting competition between search engines on mobiles.”
An excerpt from the report.
The report recommends that these kinds of arrangements for default settings be restricted by a new Digital Markets Unit agency, and that setup screens providing customers with a choice of search engine — like Google has done in Europe — would further enhance competition.
Google’s arrangement with Apple stretches back over a decade, making it the default search engine in Safari on Apple’s iPhones. Though the precise numbers remain confidential, estimates and leaked ballpark figures indicate the sums have exploded over the years, up from $82 million in 2009 to potentially $12 billion last year. While the UK agency can’t pass judgement in other markets, the sorts of numbers revealed in this report eliminate any real possibility for competition. Even if customers can change their preferred search engine later, most don’t, and Google remains top dog with the cash to spare to keep that position.
Admittedly, I have to assume the regulators didn’t actually try to use any of the competing services or compare their quality with Google — Search is very likely a monopoly, but it’s also an unrivaled product, and other options don’t quite compete when it comes to features or result quality. I couldn’t imagine doing my job without it. Still, these kinds of anti-trust concerns are all too valid. While the report doesn’t appear to recommend action like a fine (yet), we might see a similar search engine setup screen come to iPhones and Android devices in the UK, as they did for Android phones in the EU.
In the meantime, ponder the fact that Google didn’t just spend almost $1.5 billion to be the default search engine on a bunch of devices in the UK — doing that was almost certainly a profitable decision.