Eddie Cue, Apple’s senior vice president of services, today, as expected, took the stand in the Department of Justice’s antitrust lawsuit against Google. As we first reported, much of Cue’s testimony focused on Apple’s arguments for choosing Google as the default search engine on iPhones, iPads and Macs.
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According to The Verge, Q’s testimony got off to a fun start when he had trouble with the low-resolution displays in the courtroom. “The ruling on this issue is terrible,” Q joked. “You should buy a Mac.” Judge Amit Mehta immediately responded: “If Apple wants to make a donation…”
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From this point on, the readings continued and remained true to what we expected. Cue defended Apple’s decision to partner with Google, an agreement in which Google pays Apple billions of dollars every year to be the default search engine on Apple platforms. The deal, known as the Information Services Agreement (ISA), is the cornerstone of the US Department of Justice’s case against Google.
The ISA is a two-decade old agreement, first established in 2002, but has changed slightly over time due to the proliferation of the iPhone and other Apple platforms. In 2016, Cue took the reins of negotiations for the current version of the deal with Google CEO Sundar Pichai.
During his testimony today, Cue said he and Pichai disagreed on how much revenue Google should share with Apple. As a reminder, Google pays Apple a portion of the advertising revenue generated from searches Apple users make on their devices.
Ultimately, Cue said he and Pichai reached a compromise and the current version of the deal was finalized. Specific figures were not disclosed during public testimony; details were revealed only during closed conversations.
According to CNBC, several emails between Q and Tim Cook were shown during today’s testimony. In the emails, Cue explained that Pichai rejected the original proposed revenue sharing amount. Cue wrote that he needed to meet one-on-one with Pichai next week “and agree on economic terms or we should not move forward.”
When asked whether Apple would actually walk away from talks with Google if they didn’t reach an agreement, Cue said the issue was never discussed. “It’s not something we ever really thought about. “I’ve always felt it was in Google’s best interest and in our best interest to get the deal done,” Cue said. “Of course, there was no real alternative to Google at the time.”
Cue further stated that the deal between Apple and Google is about more than just money. He also suggested that there is still no real alternative to Google today, and that Apple is not considering creating its own search product to compete with Google.
One of the key issues in the Justice Department’s case is the iPhone installation process. The Justice Department wants to know why Apple doesn’t prompt users to choose their own default search engine during the setup process for a new iPhone. To make his case, a DOJ lawyer walked Q through the process of setting up a new iPhone. The idea was to illustrate how Apple allows users to customize countless things during the installation process, but not the search engine.
Cue said today that this is prohibited by the current agreement between Apple and Google. He also emphasized that Apple’s goal is to “get people working as quickly as possible” during installation. “Setup is just critical,” he said. “The more choice or more options you get, the more frustrating it is for customers.”
Providing different search options during setup would be counterintuitive, he said. “We made Google our default search engine because we always thought it was the best. We choose the best option and make it easy for users to change it,” Cue said.
To change the default search engine, users need to go to the Settings app on their device and go to the search section of the app. Cue added that Apple even offers search engine options that many users have “never heard of.” Q himself admitted that he couldn’t name some of these Google alternatives.
Google and Apple’s Different Approaches to Privacy
But one of the most confusing parts of Cue’s testimony came when he was asked about Google’s approach to user privacy and how it differs from Apple’s practices.
Cue was shown a series of internal emails in which he and other Apple executives “opposed Google’s privacy policies.” The slides shown in the courtroom included headlines calling Android a “massive tracking device.” Cue was also reminded of Eric Schmidt’s infamous quote: “Google’s policy in many matters is to get to the scary line and not cross it.”
“Absolutely,” Cue said when asked if Apple believes privacy is important to Apple. He also said the ISA includes certain restrictions on what Google can track from iPhone users. For example, Apple specifically made sure that users can search through Google without logging into a Google account. “We always thought we had a higher level of privacy than Google,” Cue said.
“As I’ve said before, we believe the iPhone is a much more proprietary device,” he later reiterated.
The DOJ’s argument is that Apple can’t think Google truly offers a “better product” if its privacy policies are so different from its own. If so, the Justice Department believes the deal between Apple and Google is based on nothing more than Google being the highest bidder.
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