Google is basically paying Apple to stay out of the search engine business

Apple has an agreement with Google that it will not develop its own Internet search engine as long as Google pays it to remain the default option in Safari, a new class action claims.

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

In particular, the complaint accuses Apple CEO Tim Cook and Google CEO Sundar Pichai from participating in “regular secret meetings” in which Google agrees to share its profits with Apple if it gets preferential treatment on devices like the iPhone and iPad. pays multibillion-dollar annual payments under an agreement that Apple will not launch its own competing search engine, and that the non-compete agreement includes plans to actively suppress smaller competitors and acquire actual and potential competitors.

The complaint alleges that the advertising rates are subsequently higher than the rates would be in a competing system. It therefore seeks an injunction on the non-compete agreement between Google and Apple, a termination of the profit-sharing agreement and preferential treatment, and an end to multibillion-dollar payments.

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

It’s no secret that Apple and Google have a significant monetary agreement that secures Google’s position as the default search engine on Apple devices. Neither company has ever confirmed exactly how much Google pays to be the default search engine on Apple devices in the United States, United Kingdom and other countries, but it’s rumored to run into the billions.

In 2020, The New York Times reported that Apple receives an estimated $8-12 billion a year in exchange for making Google the default search on its devices. According to one analyst, Google’s payment to Apple in 2021 to maintain this status quo could reach $15 billion.

This is considered the largest payment Google makes to anyone and could represent up to a fifth of Apple’s annual profits. But it has also received criticism in the past, most notably from the US Department of Justice, which claims the deal is representative of illegal tactics used to protect Google’s monopoly and suppress competition.

The UK’s Competition and Markets Authority has also called the scheme a “significant barrier to entry and expansion” for rivals in the search engine market, asking in 2020 to provide enforcement authorities with a range of options to tackle the deal between Apple and Google to to provide a more level playing field for other search engines.

Attorney Joseph M Alioto took the antitrust case to a San Francisco court this week, saying, “These powerful corporations have abused their size by illegally foreclosure and monopolizing large markets that would have created jobs in an otherwise free enterprise system. reduced, increased production, added new competitors, encouraged innovation and increased the quality of services in the digital age.”

Apple and Google would likely argue that while the payments are indeed for Google to remain the default search option, users can select other search engines in Safari, including Microsoft’s Bing, Verizon’s Yahoo, and independent search engines DuckDuckGo and Ecosia.

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

Source: macrumors