A new class action lawsuit alleges that Google pays Apple to stay out of the search business under the cover of keeping Google as the default search engine in Safari.
A lawsuit – filed in a California court earlier this week against Apple, Google, and their respective CEOs – alleges that the two firms have a non-compete agreement that violates US antitrust laws.
The complaint charges that Google and Apple agreed that Apple would not compete in the internet search business against Google. The complaint claims that the means used to effectuate the non-compete agreement included; (1) Google would share it’s search profits with Apple; (2) Apple would give preferential treatment to Google for all Apple devices; (3) regular secret meetings between the executives of both companies; (4) annual multi-billion-dollar payments by Google to Apple not to compete in the search business; (5) suppression of the competition of smaller competitors and foreclosing competitors from the search market; (6) acquiring actual and potential competitors. The complaint alleges that advertising rates are higher than rates would be in a competitive system. The complaint seeks the disgorgement of the billion-dollar payments by Google to Apple. The complaint asks for an injunction prohibiting the non-compete agreement between Google and Apple; the profit-sharing agreement; the preferential treatment for Google on Apple devices; and the payment of billions of dollars by Google to Apple.
The complaint also calls for the breakup of Google into separate and independent companies and the breakup of Apple into separate and independent companies in accordance with the precedent of the breakup of Standard Oil company into Exxon, Mobile, Conoco, Amoco, Sohio, Chevron, and others.
The complaint alleges that Apple CEO Tim Cook and Google CEO Sundar Pichai participate in “regular secret meetings” and that Google agrees to share its profits with Apple to receive preferential treatment on Apple devices.
The lawsuit alleges that Google pays annual multi-billion-dollar payments to Apple so that the Cupertino firm won’t launch its own competing search engine. The suit says that non-compete agreement has led to the active suppression of smaller competitors and acquire actual and potential competitors.
The class action also claims that the agreement between Google and Apple keeps advertising rates higher than they would be in a truly competitive system. The lawsuit seeks an injunction prohibiting the non-compete agreement between Google and Apple, a stop to the profit-sharing agreement and preferential treatment, and to cease the multi-billion dollar payments.
The suit also calls for “the breakup of Google into separate and independent companies and the breakup of Apple into separate and independent companies in accordance with the precedent of the breakup of Standard Oil company into Exxon, Mobile, Conoco, Amoco, Sohio, Chevron, and others.”
Apple and Google have long had a financial agreement that ensures that Google remains the default search engine on Apple devices. While neither company has officially announced the amount paid by Google, a 2020 The New York Times report claimed that Apple receives an estimated $8-12 billion per year in exchange for making Google the default search on its devices.
Bringing the antitrust case to a San Francisco court this week, lawyer Joseph M Alioto said: “These powerful companies abused their size by unlawfully foreclosing and monopolizing major markets which in an otherwise free enterprise system would have created jobs, lowered prices, increased production, added new competitors, encouraged innovations, and increased the quality of services in the digital age.”
Apple and Google are expected to argue that the intention of the payments is only to keep Google as the default search engine, users can change the settings on their devices to use other search engines, including Bing, Yahoo, DuckDuckGo, and other search engines.