Alphabet CEO Pichai Grilled on Record-Keeping at Google Play Trial
(Bloomberg) -- Alphabet Inc. Chief Executive Officer Sundar Pichai took the witness stand in federal court for the second time in two weeks to defend his company against antitrust claims that it abuses its market power.
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In 90 minutes of testimony Tuesday in San Francisco, Pichai sought to fend off accusations by Fortnite maker Epic Games Inc. that Google Play uses illegal tactics to maintain dominance in the mobile-app distribution marketplace.
The CEO’s message was much the same as when he was put on the spot in late October in a landmark showdown with the Justice Department in Washington over Google’s search engine business: The company has acted appropriately in the face of cutthroat competition from other giants like Apple Inc. and Samsung Electronics Co., and any harms to consumers are outweighed by the benefits Google has provided.
Still, Pichai’s difficult task of pivoting from one trial to the next as he jets from coast to coast shows the unprecedented antitrust scrutiny Google faces in the US over its power to control key aspects of the online world.
The 51-year-old CEO has a long history at Google, where he has held several roles, including helping to engineer the Android strategy and helming development of the Chrome browser. Pichai remained soft-spoken and calm on the stand, even as Epic lawyers barraged him with printouts of emails and internal records from years earlier and peppered him with questions on topics ranging from the transparency of the company’s record-keeping to relationships with its biggest partners and rivals.
Epic’s lawyers tried to show that while Google initially set up the Android operating system as an open platform, the tech giant in recent years has used revenue-share agreements with phone makers and deals with app developers to prevent rival app stores from cutting into its profit.
To that point, Epic got Pichai to bring to light one of the most closely guarded secrets in Silicon Valley: He confirmed that Google gives Apple a 36% share of the revenue earned via advertising from searches in the Safari browser to be the default search engine on Macs, iPhones and iPads. Pichai didn’t say exactly what that amounted to in dollars, but he acknowledged that Apple got the majority of $26.3 billion Google earmarked for revenue-share payments in 2021.
While the San Francisco trial doesn’t threaten Alphabet’s core business as directly as the DOJ case, the company could lose billions of dollars in revenue if jurors side with Epic and it’s forced to open the door for payment and app distribution methods outside its own app store.
Epic-Apple Fight
Similar to Epic’s still unresolved fight with Apple over its app store, the game maker claims Google has tried to monopolize the Android app distribution market for more than a decade by striking side deals to pay off rivals and uses its “vast resources to snuff out all competition.”
Epic’s attorneys showed jurors video clips from a 2011 Google developer event to underscore that the 30% revenue cut that Google Play has taken from app creators in recent years is a lot steeper than 12 years ago, when the company kept only 5% of purchases in the store on its Chrome web browser.
Pichai emphasized that the quality of Google Play services has come a long way.
“It provides the safety and security for users so they can trust those applications,” Pichai said. “It offers substantially more value.”
Other questions directed at the CEO were aimed at reinforcing its adversary’s argument that Google’s policies made it challenging for users to download and install Epic’s games directly from the game company’s servers.
‘Unknown Sources’
Users have to go through multiple steps to download apps directly from developers and are warned on their screens that downloads from “unknown sources” are unsafe, according to Epic.
Pichai said security is important and explained that such precautions are necessary as users can be easily “spoofed” into downloading harmful software.
Under friendlier questioning from Google’s attorney, Glenn Pomerantz, Pichai was asked about Epic’s claim that Google was trying to “stifle” developer choice.
Pichai said that’s not what he believes.
Google’s “mission is to provide access to information and make it universally accessible and useful,” Pichai said. The Android operating platform is “unprecedented” as there’s “never been a free and open operating system that’s reached two and a half billion users.”
Kent Walker, Google’s chief legal officer, is expected to face questioning from US District Judge James Donato Thursday, in the absence of jurors, on the company’s record-keeping practices.
Epic has accused Google of flouting a court order that required the technology giant to preserve certain documents, including employee chats and emails, for use as trial evidence. Under questioning by Epic’s lawyer Lauren Moskowitz, Pichai admitted that he incorrectly used the “attorney-client privilege” tag on emails so they wouldn’t be forwarded.
(Updates with judge to question company legal officer in final two paragraphs.)
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