When you look for something on your iPhone or Android phone, most of the time you’re searching on Google. For many of us, Google search is become the standard among search engines. However, have you ever thought how much it costs Google to keep up its dominant market share in search engines? Google invested a staggering $26.3 billion in 2021 to make sure that its search engine was always the first option on mobile devices and web browsers. A court document in the ongoing antitrust action between the U.S. government and numerous states and the tech giant revealed this information.
The amount Google pays its partners, like Apple, to maintain its search engine as the recommended option on their smartphones was revealed in the paper, according to a CNBC report. Google has been accused by the U.S. Department of Justice and a collection of state attorneys of abusing its market dominance in general search by preventing its competitors from using important distribution channels, like Apple’s Safari web browser. Although payments to any specific partner were not specified in the $26.3 billion total, it is generally accepted that Apple benefited the most. According to research company Bernstein, Google may have to pay Apple up to $19 billion in 2021 to have its default location on Apple products.
In the Department of Justice’s complaint, it is claimed that Google provides significant annual funding to distributors. These distributors include well-known device makers like Apple, LG, Motorola, and Samsung; major U.S. wireless carriers like AT&T, T-Mobile, and Verizon; and browser developers like Mozilla, Opera, and UCWeb. These money are used, among other things, to make Google’s default search engine the only one available and, frequently, to prevent Google’s partners from doing business with rival search engines. In defense of itself, Google claims that users may quickly and simply change their default search engine with a few clicks.
The court document also unveiled the revenue and costs of Google’s search business, labeled as “Google Search+ Margins.” In 2021, the search division earned over $146 billion, while the traffic acquisition costs (TAC) exceeded $26 billion.
The document also provided historical data from 2014, indicating that Google’s search division made approximately $47 billion in revenue and paid about $7.1 billion in TAC. This means that the revenue for Search+ grew nearly threefold between 2014 and 2021, while the TAC increased by almost four times.
Google reports its overall TAC in its earnings reports, but that number includes payments to network partners for displaying ads on their websites. The other part of the overall TAC figure includes payments made to “distribution partners who make available our search access points and services.” Google’s distribution partners encompass browser providers, mobile carriers, original equipment manufacturers, and software developers. This is the portion of TAC highlighted in the court document, focusing solely on Search+ revenue.
It’s obvious that it costs money to keep Google as the most popular search engine. The huge sums invested highlight the intense rivalry and the significance of dominating the digital environment of today’s search engines. There is still a lot of interest in and scrutiny surrounding Google’s capacity to lead the search engine industry, particularly in light of antitrust issues.
