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Apple exec Eddy Cue testify Google trial about $19 billion search deal

Eddy Cue, senior vice president of services at Apple Inc.

David Paul Morris | Bloomberg | Getty Images

Apple senior vice president of services Eddy Cue is expected to testify all day Tuesday in federal court where the U.S. Department of Justice is accusing Google of using licensing agreements to monopolize online search.

Under scrutiny is a deal in which Google pays Apple billions of dollars to be the default search engine on the iPhone’s browser and other settings. Google could pay Apple as much as $19 billion this year, according to an estimate from Bernstein.

Cue, who negotiated the deal with Google from Apple’s side, is expected to testify that Apple picked the Google search engine as an iPhone default because it was the best product. He’s also expected to say that Apple doesn’t see a reason to create a new Apple search engine because Google already exists, according to a person familiar with Cue’s anticipated testimony.

Cue will also say that Apple has revenue-sharing agreements with competing search engines Yahoo, Microsoft Bing, DuckDuckGo and Ecosia, and that Apple users can change their default search engines, according to a person familiar with Cue’s anticipated testimony.

The testimony could shed some light on one of the highest-profile deals in the technology industry, which has been shrouded in secrecy for the past decade. The money Google pays to Apple for default placement is one of its biggest costs, and the advertising revenue Apple collects from Google is a major part of Apple’s profits.

Apple reports its payments from Google as advertising revenue, reported in its services business, which totaled $78.1 billion in sales in Apple’s fiscal 2022.

“I think their search engine is the best,” Apple CEO Tim Cook said when asked about using Google as the iPhone’s default search engine in 2018.

Google on trial

Much of Cue’s testimony and related financial documents could remain under seal, which means they won’t be released to the public.

Last week, Apple machine learning executive John Giannandrea testified. Before Apple, he worked at Google on its search engine.

The D.C. District Court judge, Amit Mehta, has said he wants to be conservative about how many documents are released to the public, and last week’s Giannandrea testimony was entirely sealed except for 15 minutes, where Giannandrea revealed a new search engine setting on the most recent iPhone operating system.

The DOJ previously had a page on its website where it would post documents and exhibits from the trial, and it was taken down last week on Google’s request.

The Google trial, expected to last 10 weeks, is the biggest technology monopoly trial since the DOJ took on Microsoft more than 20 years ago. The DOJ alleges Google has violated anti-monopoly law by striking exclusive agreements with mobile phone makers for its Android operating system and browser companies for default placement. The government alleges that the practice creates barriers to entry for competing search engines.

“This case is about the future of the internet and whether Google’s search engine will ever face meaningful competition,” the DOJ’s lawyer, Kenneth Dintzer, told the court in opening statements. He alleged that Google has more than 89% of the market for general search.

Google said before the trial kicked off earlier this month that it sees licensing agreements as a standard business practice that brings its products to consumers and creates a better experience for users. Google also argues that consumers can easily change default search engines on Android and Apple phones.

The DOJ is expected to present its case for about four weeks, then a coalition of attorneys general will present their case, followed by Google. Google CEO Sundar Pichai is also expected to testify, the DOJ said.

CNBC’s Steve Kovach contributed to this story.

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