Apple and Google are two of the biggest names in the tech industry. Their dominance in smartphone hardware and software respectively is sufficiently well-known. However, if you own Apple devices, then you will see that Google is the default search engine on all of them. Ever wondered why?
It seems the answer is simple – Apple is being paid a huge sum by Google so that it is the default search engine on Apple devices. We do not know the exact sum, since neither company has disclosed the amount, but that might change soon.
A class-action lawsuit has been filed claiming that both Apple and Google have violated US antitrust laws as Google keeps on paying Apple to be (and remain) the default search engine on Apple’s devices such as iPhones, iPads, or Macs.
Google’s dominance on Apple users as the search engine earns it a neat amount of revenue, along with a great amount of search traffic from Apple users. The lawsuit, filed in a California court earlier this week alleges the two companies have a non-compete agreement that violates US antitrust laws.
According to the agreement, Apple would not develop its own search engine (for which Google would pay it in the billions) either. Additionally, Google would share its search profits with Apple, and Apple would give preferential treatment to Google for all Apple devices. The lawsuit also charged that the executives of both companies participated in “regular secret meetings.” This also includes plans to suppress competition and even acquire actual and potential competitors.
Bernstein analysts estimate that the amount Google pays to Apple was $15 billion last year, which may increase to $18-20 billion this year. This data is based on “disclosures in Apple’s public filings as well as a bottom-up analysis of Google’s TAC (traffic acquisition costs) payments.”
This agreement might be beneficial to both Apple and Google, but the same cannot be said of competing search engines or businesses that place advertisements with Google. Google’s agreement with Apple represents illegal tactics used to protect Google’s monopoly and stifle competition, according to the US Justice Department. The Competition and Markets Authority (CMA), the competition regulator in the UK, called it a “significant barrier to entry and expansion” for rivals in the search engine market.
The class-action lawsuit seeks an injunction that prohibits the non-compete agreement between Google and Apple, the profit-sharing agreement and preferential treatment, the multi-billion dollar payments, and “the breakup of Google into separate and independent companies.”