It’s an open secret that Google pays Apple billions of dollars every year to be the default search engine on Apple devices. In other words, the search engine used when you just type your search term into the address / combo search bar.
Neither company is disclosing the amount, which has led to various estimates over the years. But a new class action lawsuit could reveal the real sums …
Being the default search engine on iPhones, iPads, and Macs goes a long way for Google, as relatively few people change the default. This means that Google gets a huge amount of its search traffic from Apple users, and therefore the ability to place ads in front of them.
Add to that the fact that Apple customers are a particularly valuable demographic, and you can see why Google would be willing to pay big bucks to maintain the status quo.
One of the most recent estimates of the sum was from Bernstein.
Bernstein analysts estimate that Google’s payment to Apple will increase to $ 15 billion in 2021, and between $ 18 billion and $ 20 billion in 2022. The data is based on “disclosures in Apple’s public documents as well as on bottom-up analysis of Google’s TAC. (traffic acquisition costs) payments.
Search engine default class action
A class action was filed, claiming the arrangement is detrimental to both competing search companies and businesses that place ads with Google. He further alleges that the agreement violates antitrust laws.
California Crane School, Inc. has filed an antitrust class action lawsuit [3:21-cv-10001, C.C.S.I. v Google LLC] on 12/27/21 against Google and Apple and the CEOs of both companies alleging violations of US antitrust laws.
The complaint accuses Google and Apple of agreeing that Apple will not compete with Google in internet search. The complaint claims that the means used to effect the non-compete agreement included; (1) Google would share its search profits with Apple; (2) Apple would give preferential treatment to Google for all Apple devices; (3) regular secret meetings between the leaders of the two companies; (4) multi-billion dollar annual payments by Google to Apple not to compete in search; (5) elimination of competition from smaller competitors and exclusion of competitors from the research market; (6) acquire actual and potential competitors. The complaint alleges that the advertising rates are higher than the rates would be in a competitive system. The complaint seeks the disgorgement of payments of a billion dollars by Google to Apple.
The complaint seeks an injunction prohibiting the non-compete agreement between Google and Apple; the profit-sharing agreement; Google’s preferential treatment on Apple devices; and the billion dollar payment by Google to Apple.
It can be said that consumers suffer indirect harm, as higher advertising costs will result in higher prices for the products.
The lawsuit also calls for Apple and Google to split into smaller companies.
The discovery would likely reveal the amount paid
If the lawsuit continues until the discovery process, it would likely lead to the disclosure of the actual amounts paid to Apple.
Discovery is a pre-trial process in which each party has the right to ask the other for relevant information, both by posting otherwise confidential documents and by interviewing company officials. The details of the sums actually paid would seem extremely relevant in the present case, and therefore almost certain to be requested.
It should be noted, however, that many class actions do not make it to trial, or even to the discovery phase. Lawsuits can be settled at an early stage, and defendants can also file lawsuits to dismiss before they make any progress.
The lawsuit is being initiated by a relatively small company, so how it will unfold in part will likely depend on the lawyers’ ability to involve big names.
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