Eddy Cue, Apple’s senior vice president of Services, took the stand as expected today in the Department of Justice’s antitrust lawsuit against Google. As we first reported would be the case, much of Cue’s testimony centered on Apple’s reasoning for choosing Google as the default search engine on iPhone, iPad, and Mac.
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As recapped by The Verge, Cue’s testimony got off to a fun start when he had some problems with the low-resolution displays in the courtroom. “The resolution on this is terrible,” Cue joked. “You should get a Mac.” Judge Amit Mehta shot right back, “If Apple would like to make a donation…”.
From there, the testimony proceeded and stayed true to what we expected. Cue defended Apple’s decision to partner with Google, an agreement through which Google pays Apple billions of dollars every year to be the default search engine on Apple’s platforms. This deal, referred to as the Information Services Agreement (ISA) is a tentpole of the DOJ’s case against Google.
The ISA is a two-decade-old agreement, first being reached in 2002, but it’s changed quite a bit over the years thanks to the proliferation of the iPhone and Apple’s other platforms. In 2016, Cue took the reins on negotiating the current version of the deal with Google CEO Sundar Pichai.
During his testimony today, Cue said that he and Pichai disagreed on how much revenue Google should share with Apple. As a refresher, Google pays Apple a cut of the advertising revenue generated from searches that Apple users make through its devices.
Eventually, Cue said that he and Pichai reached a compromise and the current iteration of the deal was finalized. Specific numbers were not revealed during the public testimony, with those details only disclosed during closed-door conversations.
As reported by CNBC, several emails between Cue and Tim Cook were shown during today’s testimony. The emails showed Cue explaining that Pichai had rejected the initial proposed revenue-sharing amount. Cue wrote that he needed to meet one-on-one with Pichai the following week “and agree to the economic terms or we shouldn’t move forward.”
When asked whether or not Apple would have actually walked away from negotiations with Google had the two not come to an agreement, Cue said that was never on the table. “It’s not something we ever really truly considered. I always felt like it was in Google’s best interest, and our best interest, to get a deal done,” Cue testified. “Certainly there wasn’t a valid alternative to Google at the time.”
Cue went on to testify that the deal between Apple and Google is about more than just money. He also suggested that there still isn’t a valid alternative to Google today, nor is Apple considering building its own search product to compete with Google.
One key focus of the DOJ’s case is the iPhone setup process. The DOJ wants to know why Apple doesn’t prompt users to choose their own default search engine during the setup process of a new iPhone. To build its case, a Justice Department lawyer walked Cue through the process of setting up a new iPhone. The idea was to illustrate how Apple lets users customize countless things during the setup process, but not the search engine.
Cue testified today that this isn’t allowed under the current agreement between Apple and Google. He also emphasized that Apple’s goal is to “get people up and running as fast as possible” during setup. “Setup is just critical stuff,” he said. “The more choices or the more options that you get, it frustrates customers.”
Presenting different search options during setup would be counterintuitive to that, he explained. “We make Google the default search engine because we’ve always thought it was the best. We pick the best one and let users easily change it,” Cue said.
To change the default search engine, users have to go to the Settings app on their device and navigate to the search section of the app. Cue added that Apple even offers search engine options that many users “have never heard of.” Cue himself admitted to not being able to name some of those alternatives to Google.
Google and Apple’s differing approaches to privacy
But one of the messiest parts of Cue’s testimony came when pressed on Google’s approach to user privacy, and how that differs from Apple’s practices.
Cue was shown a number of internal emails in which he and other Apple executives “railed against Google’s privacy policies.” Slides shown in the courtroom featured headlines referring to Android as “a massive tracking device.” Cue was also reminded of the infamous Eric Schmidt quote: “The Google policy on a lot of things is to get right up to the creepy line and not cross it.”
“Absolutely,” Cue said when asked whether Apple believes privacy is important to Apple. He also revealed that the ISA includes specific limits on what Google is allowed to track from iPhone users. For instance, Apple specifically ensured that users could search via Google without logging into a Google account. “We’ve always thought we had better privacy than Google,” Cue said.
“As I stated earlier, we think the iPhone is a much more private device,” he reiterated later.
The DOJ’s argument is that Apple can’t possibly think that Google truly offers the “best product” if its privacy practices are so different than its own. If that’s the case, then the DOJ believes the deal between Apple and Google is based on nothing more than Google being the highest bidder.
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