Apple Senior Vice President for Providers Eddy Cue arrives on the Prettyman U.S. Court docket Home on September 26, 2023 in Washington, DC.
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Eddy Cue, Apple’s senior vice chairman of providers, testified on Tuesday that the corporate selected to make Google the default search engine on iPhones as a result of it made essentially the most sense for customers and “there wasn’t a sound various.”
Cue, Apple’s lead negotiator of its multibillion-dollar contract with Google, appeared in federal court docket in Washington, D.C., to debate the long-standing settlement between the 2 corporations. Although extra granular particulars of the settlement are more likely to come up additional in testimony that is closed to the general public, Cue’s opening statements make clear on elements of the deal hardly ever mentioned within the open.
“Once we’re choosing serps, we decide the most effective one and we let the shopper simply change them,” Cue mentioned. He later added that on the subject of alternate options that Apple gives, they’ve some that “prospects have by no means heard of,” which may make them afraid of constructing the unsuitable alternative.
Bernstein has estimated that Google might pay Apple as a lot as $19 billion this yr below the settlement, although the precise phrases haven’t been revealed.
When Cue renegotiated the Data Providers Settlement (ISA) with Google CEO Sundar Pichai in 2016, one in every of his objectives was to get Google to extend the income share proportion it pays to Apple, Cue mentioned in his testimony. Below the phrases, Google pays an undisclosed reduce of the online income it makes from promoting on searches run on Apple units.
Google CEO Sundar Pichai (L) and Apple CEO Tim Cook dinner (R) hear as U.S. President Joe Biden speaks throughout a roundtable with American and Indian enterprise leaders within the East Room of the White Home on June 23, 2023 in Washington, DC.
Anna Moneymaker | Getty Photographs
Cue mentioned he “thought it was the fitting factor and the honest factor for us,” to extend the income sharing proportion. Apple had constructed the know-how and “deserved” a better income share, he testified.
Meagan Bellshaw, the Justice Division lawyer, introduced up a 2016 electronic mail correspondence with Apple CEO Tim Cook dinner, Cue’s boss. Bellshaw directed Cue to reference a “Rosetta Stone” that matched letters to corresponding income sharing percentages, in order that the precise numbers wouldn’t be revealed in open court docket.
Within the first change that was shared, Cook dinner requested Cue how the assembly went, which Cue mentioned he understood to imply his assembly with Pichai concerning the search contract. Cue responded that it was “good apart from the rev share.” Pichai “didn’t come again with a particular quantity, however mentioned there isn’t a method he might make C proportion work,” referring to the quantity Apple sought within the negotiation.
Within the electronic mail to Cook dinner, Cue mentioned he wanted to fulfill with Pichai “alone subsequent week and comply with the financial phrases or we should not transfer ahead,” referring to the income sharing quantity.”
However Cue mentioned on the stand Tuesday that he was assured a deal would get labored out with Google and that he hadn’t severely contemplated what Apple would do if it did not.
“Definitely there wasn’t a sound various we’d have gone to,” Cue testified. “It isn’t one thing that we ever actually actually thought of.”
Finally, Cue mentioned he felt it was in the most effective pursuits of each corporations to finalize a deal.
Cue mentioned the 2 sides agreed to a income sharing proportion that was completely different from the quantity every introduced initially. The phrases of the deal have been renewed in 2021 to increase the contract.
The DOJ requested whether or not there was a provision within the settlement for Apple to help and defend the deal in connection to authorities actions. Cue confirmed there was however that he did not know loads about it. On the time, Cue mentioned, Google had requested the addition whereas it was below investigation in Europe, and Apple’s counsel had mentioned it was nice to incorporate.
‘It frustrates prospects’
The DOJ additionally requested Cue to element how Apple decides the place and the way it will give customers a alternative concerning the setup of their iPhones. One various that Google rivals have floated to its default standing on units is to offer customers an opportunity to overview their search engine choices in a method that presents them equally.
Cue’s testimony spoke to among the challenges that strategy might face.
He mentioned that when customers get a brand new gadget, they need it to work shortly.
“The extra selections or the extra choices that you just get, it frustrates prospects,” he mentioned. So when a buyer will get a brand new iPhone, for instance, they will solely be requested about selecting key particulars they need to take care of instantly, like font measurement.
Cue mentioned that providing customers a alternative for his or her look settings out of the field is completely different from choosing a search engine.
In sure nations, like China and Russia, Apple has carved out the default standing for Google as a result of it decided that there was a greater choice for customers in these areas. However somewhere else world wide, the corporate nonetheless sees Google as providing the most effective expertise, Cue mentioned.
In his testimony, Cue additionally reiterated criticism that Apple has on the subject of Google’s privateness practices. Cue mentioned he agrees defending privateness is essential to Apple, together with on search, and mentioned the corporate has taken steps to restrict Google’s monitoring skill on its units. For instance, it prevents Google from forcing customers to log in to make use of the search engine.
The DOJ introduced a slide deck Cue despatched to Cook dinner in January 2013 titled, “Competing on Privateness.”
A slide labeled “Privateness Timeline” included a headline about Google’s $22.5 million settlement with the Federal Commerce Fee in 2012 over claims it misled customers about its monitoring on Apple’s Safari browser. Cue acknowledged he was conscious of that settlement when negotiating the ISA, however added, “we have at all times thought we have had higher privateness than Google.”
One other slide referenced a quote from former Google CEO Eric Schmidt, who mentioned the corporate’s coverage boils all the way down to getting “proper as much as the creepy line” however not crossing it.
A later slide known as Google’s Android cellular working system “an enormous monitoring gadget.”
“As I said earlier, we expect the iPhone is a way more personal gadget,” Cue testified.
Google declined to touch upon the testimony.
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