Apple Considered Acquiring Bing to Challenge Google in Search, Unsealed Testimony Reveals
In a rare glimpse into the inner workings of the tech industry, unsealed testimony from an Apple senior vice president, John Giannandrea, revealed that Apple had considered mounting a challenge against Google in the search sector by acquiring Microsoft’s search engine, Bing. The testimony was made public in a Washington, D.C. court after criticism that too much of a landmark antitrust trial against Google was being conducted behind closed doors. Apple lawyers had initially argued against Giannandrea taking the stand and sought to seal details about Apple’s business with Google on the grounds of trade secrets.
The trial has shed light on why few tech giants have seriously attempted to compete with Google in the search market, where the company holds a steady 90 percent market share. According to Giannandrea’s testimony, Apple had indeed considered the possibility of challenging Google but ultimately abandoned the idea to continue its lucrative revenue-sharing agreement with the search giant. It is worth noting that other major smartphone makers also maintain similar agreements with Google.
Estimates from equity research firm Sanford Bernstein indicate that Google will pay Apple up to $19 billion this year to have its search engine set as the default on iPhones and other devices. However, Apple executives have rarely discussed this agreement publicly. The unsealing of Giannandrea’s testimony had been eagerly awaited by trial observers after Judge Amit Mehta announced it several days in advance. Initially, Giannandrea had testified publicly for only about 10 minutes before the remainder of his session was sealed.
The Google trial marks the first time in over two decades that the Justice Department has filed an antitrust case against a major tech company. The secrecy surrounding the hearings drew criticism, leading Judge Mehta and Google to reverse course and make more of the testimony public.
Giannandrea’s testimony reflects the extensive consideration that took place within Apple regarding the possibility of competing with Google by launching its own search engine. He revealed that Apple had already started redirecting a modest number of search queries from its Safari search engine to its “Safari Suggestions” feature instead of passing them directly to Google. This move allowed Apple to intercept the queries and determine whether it could provide assistance.
Furthermore, Giannandrea disclosed that Apple had met with Microsoft in 2018 to discuss the potential acquisition of Bing. The talks were highly secretive at the time, as it would have been challenging to operate Bing with the knowledge that a sale was imminent. The option of a Bing acquisition, as well as a joint venture with Microsoft and other possibilities, were presented to Apple CEO Tim Cook in a slide deck during that time. Ultimately, Giannandrea came to the “definitive opinion” that Apple should not proceed with acquiring Bing, and Cook conveyed this rejection to Microsoft.
The unsealed transcript also revealed how Apple leveraged Bing as a bargaining chip during negotiations for its revenue-sharing agreement with Google. In an internal email read aloud by a Justice Department prosecutor, Apple vice president Adrian Perica stated that they built up Bing in order to create negotiating leverage, maintain their take rate from Google, and have the option to replace Google in the future.
Overall, this unsealed testimony provides valuable insights into the behind-the-scenes maneuvers and considerations that take place in the tech industry, particularly in relation to search engine competition and revenue-sharing agreements. With Google’s dominant position in the search market, it appears that challenging the tech giant requires significant deliberation and strategic decision-making.