• Wed. Jan 12th, 2022

Google is basically paying Apple to stay out of search engine business, alleged class action lawsuit says

ByVirginia D. Bannon

Jan 5, 2022

Apple has a deal with Google that it won’t develop its own internet search engine until Google pays it to remain the default option in Safari, according to a new class action lawsuit.

Filed in a California court earlier this week against Apple, Google and their respective CEOs, the lawsuit alleges the two companies have a non-compete internet search agreement that violates US antitrust laws.

More precisely, the complaint accuses Apple CEO Tim Cook and Google CEO Sundar Pichai of participating in “regular secret meetings” in which Google agrees to share its profits with Apple if it receives preferential treatment on devices like the iPhone and iPad.

The class action lawsuit also alleges that Google is making multi-billion dollar annual payments to Apple based on an agreement that Apple will not launch its own competing search engine, and that the non-compete agreement includes plans. aimed at actively removing small competitors and acquiring potential competitors.

The complaint alleges that the advertising rates are subsequently higher than the rates would be in a competitive system. She is therefore asking for an injunction prohibiting the non-competition agreement between Google and Apple, the termination of the profit-sharing and preferential treatment agreement, and the end of payments of several billion dollars.

Finally, the complaint calls for “the split of Google into separate and independent companies and the split of Apple into separate and independent companies in accordance with the precedent of the split of Standard Oil into Exxon, Mobile, Conoco, Amoco, Sohio, Chevron , and others.”

It’s no secret that Apple and Google have a massive monetary deal that secures Google’s position as the default search engine on Apple devices. Neither company has ever confirmed exactly how much Google is paying to be the default search engine on Apple devices in the US, UK and other countries, but that number is said to be billion.

In 2020, The New York Times reported that Apple receives around $ 8 billion to $ 12 billion a year in exchange for making Google search the default on its devices. Google’s payment to Apple in 2021 to maintain this status quo could have reached as much as $ 15 billion, according to an analyst.

It’s believed to be the single largest payment Google makes to anyone, and could account for up to a fifth of Apple’s annual profits. But it has also been the subject of intense scrutiny in the past, particularly by the United States Department of Justice, which complaints that the deal is representative of illegal tactics used to protect Google’s monopoly and stifle competition.

The UK Competition and Markets Authority also called the deal a “significant barrier to entry and expansion” for competitors in the search engine market, and in 2020 requested that the responsible authorities law enforcement agencies have a range of options to resolve the deal between Apple and Google to provide a level playing field for other search engines.

Taking the antitrust case to a San Francisco court this week, attorney Joseph M Alioto said: “These powerful corporations have abused their size by illegally blocking and monopolizing major markets which, in an otherwise free enterprise system , would have created jobs, lowered prices, increased production, added new competitors, encouraged innovation and improved the quality of services in the digital age. “

Apple and Google would likely argue that even though the payments are in effect for keeping Google as the default search option, users can select other search engines in Safari, including Microsoft’s Bing, Verizon’s Yahoo, and Google’s search engines. independent research DuckDuckGo and Ecosia.

Apple would also point out that it is already in the search engine business and maintains an active web crawler called Applebot. The crawler operates primarily in the background to improve ‌Siri‌ and Spotlight search results, although earlier reports have interpreted Applebot’s increased activity as an “intensification” of Apple’s efforts to develop its own technology. research if its deal with Google became incompatible with antitrust laws.