Google Proposes Changes to Default Search Agreements

By Jody Godoy

(Reuters) – Alphabet (NASDAQ:GOOGL)’s Google proposed on Friday a loosening of its agreements with Apple (NASDAQ:AAPL) and others to set Google as the default search engine on new devices. This move aims to address a U.S. ruling that Google unlawfully dominates online search.

The proposal is narrower than the government's call for Google to sell its Chrome browser in an antitrust case regarding online search.

Google urged U.S. District Judge Amit Mehta to be cautious in determining necessary actions for restoring competition after his ruling found the company to have an illegal monopoly in online search and related advertising.

While Google plans to appeal the ruling, it suggests that the upcoming remedial phase focus on its distribution agreements with browser developers, mobile device manufacturers, and wireless carriers.

The judge noted that these agreements provide Google with a "major, largely unseen advantage over its rivals," resulting in most devices in the U.S. shipping with Google's search engine pre-loaded.

Exiting these agreements is particularly difficult for Android manufacturers, which are required to install Google search to include Google’s Play Store on their devices.

To address this, Google proposed making these agreements non-exclusive and unbundling its Play Store from Chrome and search for Android manufacturers.

Unlike the government's proposals, Google’s would not terminate revenue-sharing agreements, which allot a portion of Google’s ad revenue to device and software companies that set it as the default search engine.

Independent browser developers, including Mozilla (maker of Firefox), have indicated that these funds are essential for their sustainability. Apple alone received an estimated $20 billion from its agreement with Google in 2022.

Google's proposal leads into a trial in April, where the U.S. Department of Justice and a coalition of states will argue for wide-ranging remedies, including legislative moves to compel Google to sell Chrome and possibly its Android mobile operating system.

Additionally, prosecutors want Google to stop paying to maintain its default search status, cease investments in search rivals and AI products, and license its search technology to competitors. They argue such moves are designed to make way for innovation in online search, as Mehta’s ruling indicated that Google’s dominant market share prevents competitors from accessing necessary search data needed for product enhancement. They seek to halt Google from extending its search dominance into AI products.