Google CEO Sundar Pichai was summoned to federal court on Tuesday for the second time in two weeks to testify in an antitrust lawsuit that threatens to topple a pillar of an Internet empire he helped build.
In his latest court appearance in San Francisco, Pichai spent more than two hours defending the business practices of the Google Play Store, which distributes apps for the company’s Android software that powers most of the world’s smartphones.
At times, the soft-spoken Pichai looked dejected and frustrated by the confrontational questioning he faced. Other times he came across as a professor explaining complex subjects to of the trial The 10-person jury, located just meters from a podium, was used by Pichai because he has difficulty sitting for long periods of time.
Epic Games, maker of the popular video game Fortnite, is trying to convince a jury that a Google Play payment system that collects 15% to 30% commissions from in-app purchases illegally harms consumers and software developers. Google collects these commissions, according to Epic, by using its marketing muscle to work against competing Android app stores — a strategy that drives up prices and discourages innovation.
It echoes an earlier case Epic brought against Apple, the iPhone maker that is alternately portrayed as Google’s foe and ally in this lawsuit.
Pichai’s latest testimony came 15 days after he left for Washington DC to take a stand in a separate antitrust lawsuit revolves around the US Department of Justice’s allegations that Google has stifled competition and innovation by abusing the power of the dominant search engine that launched the company in 1998.
Although the two lawsuits take place at opposite ends of the country and delve into different parts of a company that investors value at $1.7 trillion, they touch on at least two common issues — Google’s enormous power and its unusual relationship with Apple, a even bigger technical powerhouse.
A key part of Google’s defense against accusations that its Play Store has an illegal monopoly on Android apps hinges on the claim that the company faces strong competition from Apple’s iPhone, mobile operating system and app store.
Meanwhile, the Justice Department’s case against Google in Washington focuses largely on deals the company negotiated with Apple to ensure that Google’s search engine automatically submits queries typed on iPhones and Apple’s Safari browser.
After Monday’s testimony from an expert witness in the antitrust trial in Washington revealed that Google shared 36% of its ad revenue from Safari search queries with Apple in 2021, Pichai was forced to confirm the figure Tuesday in San Francisco during often combative questioning by epic lawyer Lauren Moskowitz.
Things got so tense that, before adjourning for a short break, US District Judge James Donato described the back-and-forth between Epic’s lawyer and Pichai as a “rocky 75 minutes.”
Before testimony began, Donato had granted Moskowitz’s request to disclose the exact amount of money Google paid Apple in 2021 over objections from both Google and Apple’s lawyers, but she never specifically received it.
Instead, Moskowitz got Pichai to admit that Apple received the bulk of the $26.3 billion Google paid for all its 2021 deals that locked in its search engine as the automatic manager of queries on smartphones and browsers. Analysts have estimated Apple’s annual take from Google at between $15 billion and $20 billion.
Moskowitz also pointed out that Apple’s 36% cut from Google’s search ad revenue in the Safari browser was more than double the 16% paid to Samsung, the biggest seller of Android smartphones. That point seemed aimed at painting Apple as one of Google’s biggest business partners, rather than a major competitor.
Although at times he seemed thrown off balance by Moskowitz’s aggressive questioning, Pichai never wavered from his insistence that Google and Android compete “fiercely” with Apple and the iPhone — a rivalry he argued has given consumers more choice and driven down prices.
“We’re enabling more affordable smartphones,” Pichai said of Android, which Google gives away to Samsung and other smartphone makers for free in exchange for putting the company’s search engine and other services, such as its Play Store, on the devices. That, Pichai added, “is very different from what Apple does.”
Apple’s specter looms over the Play Store in other ways too, given that Epic Games has already lost in a similar trial in 2021 which targeted the iPhone App Store payment system.
Although a federal judge sided with Apple On most fronts in that trial, the outcome opened a potential crack in the digital fortress the company has built around the iPhone.
The judge and a court of appeal both ruled that Apple should allow apps to provide links to other payment options, a change that could undermine the commissions that both Apple and Google collect on digital purchases made in a mobile app. Apple is appealing that part of the ruling to the US Supreme Court.
Evidence submitted during Pichai’s testimony on Tuesday showed just how lucrative the Play Store has been for Google. In the first half of 2020, for example, the Play Store generated an operating profit of $4.4 billion.
Under questioning from a Google lawyer, Pichai pointed out that the figure did not account for the billions of dollars the company spends on the Android operating system that ensures people have smartphone options other than the iPhone. He also pointed out that 97% of software developers with apps on Google Play don’t pay any fees at all because they either don’t sell digital goods or don’t generate enough revenue to meet the threshold that triggers the commissions.
“The way we designed Google Play is that we only do it well when the developers do it well,” Pichai said.
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