Google CEO Sundar Pichai returns to court to defend internet company for second time in two weeks

Google Chief Executive Sundar Pichai was summoned to federal court on Tuesday for the second time in two weeks to testify in an antitrust lawsuit that threatened to topple a pillar of an Internet empire he helped build.

In his latest court appearance in San Francisco, Pichai spent more than two hours defending the business practices of Google's Play Store, which distributes apps for the company's Android software that powers most of the world's smartphones.

At times, the soft-spoken Pichai seemed anxious and frustrated by the confrontational questions he faced. At other times he came across as a professor explaining complex issues to the 10-member trial jury that sat just feet away from a podium that Pichai was allowed to use because he has trouble sitting for extended periods.

Epic Games, the maker of the popular video game Fortnite, is trying to convince a jury that a Google Play payment processing system that takes a 15% to 30% commission from in-app purchases is unfairly harming consumers and software developers. Google collects these fees, according to Epic, by using its market power to block competing Android app stores — a strategy that raises prices and discourages innovation.

It echoes an earlier case Epic brought against Apple, the iPhone maker that has alternately been portrayed as Google's foe and ally in this lawsuit.

Pichai's latest testimony came 15 days after he traveled to Washington, D.C., to take the stand in a separate antitrust trial revolving around the Justice Department's allegations that Google has stifled competition and innovation by abusing the power of the dominant engine. search that started the company in 1998.

Although the two trials are taking place at opposite ends of the country and delve into different parts of a company that investors value at $1.7 trillion, they touch on at least two common issues — Google's enormous power and its unusual relationship with Apple, a larger technological power.

A key part of Google's defense against claims that its Play Store operates an illegal monopoly on Android apps hinges on the claim that the company faces heavy competition from Apple's iPhone, mobile operating system and app store.

Meanwhile, the Justice Department's case against Google in Washington focuses largely on agreements the company negotiated with Apple to ensure that Google's search engine automatically places queries entered on iPhones and the Safari browser of Apple.

After expert testimony in the Washington trial revealed that Google shared 36% of its ad revenue from Safari search queries with Apple in 2021, Pichai was forced to confirm the number on Tuesday in San Francisco under often combative questioning from Epic attorney Lauren Moskowitz. .

Things got so tense that before adjourning for a short break, U.S. District Judge James Donato described the back-and-forth between Epic's lawyer and Pichai as “an excruciating 75 minutes.”

Before the deposition began, Donato had granted Moskowitz's request to disclose the exact amount of money Google paid Apple in 2021 over objections from both Google and Apple's lawyers, but she never found out.

Instead, Moskowitz got Pichai to acknowledge that Apple received most of the $26.3 billion Google paid for all 2021 deals locked into its search engine as the auto-handler of queries on smartphones and web browsers. Analysts have estimated that Apple's annual earnings from Google range from $15 billion to $20 billion.

Moskowitz also pointed out that Apple's 36 percent cut of Google's search ad revenue in its Safari browser was more than double the 16 percent paid to Samsung, the biggest Android smartphone seller. That point seemed aimed at framing Apple as one of Google's biggest business partners, rather than a major competitor.

Although at times he seemed thrown off balance by Moscovici's aggressive questioning, Pichai never wavered from his insistence that Google and Android were competing “fiercely” with Apple and the iPhone — a competition he argued gave consumers more choice. and cut prices.

“We enable more affordable smartphones,” Pichai said of Android, which Google gives free to Samsung and other smartphone makers in exchange for putting the company's search engine and other services, such as the Play Store, on the devices. That, Pichai added, “is very different from what Apple does.”

Apple's specter extends to the Play Store in other ways as well, as Epic Games has already lost a similar 2021 trial targeting the payment system for the iPhone app store.

Although a federal judge sided with Apple on most fronts in that trial, the outcome opened a potential crack in the digital fortress the company has built around the iPhone.

The judge and an appeals court both ruled that Apple must allow apps to provide links to other payment options, a change that could undermine the commissions that both Apple and Google collect for digital purchases made in a mobile application. Apple is appealing that part of the decision to the US Supreme Court.

Figures presented during Pichai's testimony on Tuesday showed just how lucrative the Play Store has been for Google. In the first half of 2020, for example, the Play Store generated $4.4 billion in operating profit.

Prompted by a question from a Google lawyer, Pichai pointed out that this amount did not account for the billions of dollars the company spends on the Android operating system that ensures people have smartphone options other than the iPhone. He also pointed out that 97% of software developers with apps on Google Play don't pay fees at all because they either don't sell digital goods or don't generate enough revenue to reach the threshold that triggers commissions.

“The way we designed Google Play is that we only do well when developers do well,” Pichai said.