Google accused of paying Apple billions to keep it away from internet search market
Lawsuit also claims Apple gives preferential treatment to Google on all Apple devices
A class-action antitrust lawsuit has been filed in California against Google, Apple and the chief executives of both companies, alleging violations of US antitrust laws.
The complaint, filed by The California Crane School, claims that the tech firms came to an agreement that Google would pay Apple multiple billions of dollars each year to forego developing its own search engine to avoid competing with Google.
The lawsuit also alleges that Google shares its search profits with the iPhone maker, while Apple gives preferential treatment to Google on all Apple devices in return.
Other alleged means in which the companies collude in anticompetitive practices include:
- regular secret meetings between the executives of both firms
- suppression of competition from smaller rivals and foreclosing competitors from the search market
- acquiring potential and actual competitors
By doing this, both companies are responsible for the higher advertising rates, which would be lower if there were a competitive system, the Northern District of California complaint alleges.
It further claims that Google abuses its market dominance, controlling 94 per cent of the domestic mobile search engine market and 82 per cent of the domestic computer search engine market as of September 2020.
The lawsuit points a finger at Steve Jobs, the former CEO of Apple, and Eric Schmidt, the former chief executive and Chairman of Google as the "architects" of the alleged scheme during the early 2000s.
"More recently, the continued combination to eliminate competition between Apple and Google for the search business has been reaffirmed by Tim Cook, the CEO of Apple, and Sundar Pichai, CEO and Chairman of Google," it adds.
The lawsuit seeks the seizure of the billion-dollar payments made by Google, as well as a ban on Google and Apple's non-compete agreement.
It makes claims for damages and injunctive relief, and also states a claim for fraudulent concealment, arguing that the plaintiff and putative class - meaning all individuals and businesses who paid for Google search advertising in the US since 2005 - could not have discovered the scheme any earlier due to the defendants' intentional cover up.
It also wants the court to stop Apple's preferential treatment of Google on its devices and for the giant firms to be split into separate businesses, similar to how Standard Oil was broken up into smaller firms.
In recent years, both Google and Apple have faced intense scrutiny in multiple countries over their business practices.
The UK's Competition and Markets Authority (CMA) said last month that it was concerned about the "effective duopoly" of the two firms in the mobile systems market, which could lead to less competition and choice for customers.
In an interim report, the CMA said that it had provisionally found that the two firms have created "largely self-contained ecosystems" by leveraging their market dominance, which is making it nearly impossible for other firms to compete with them.
The regulator thinks Apple and Google's control of the mobile ecosystem is not only limiting choice and innovation for customers, but also leading to higher prices.
The CMA is also investigating Google's Privacy Sandbox proposals and Apple's App Store over competition concerns.
The European Commission currently has four ongoing antitrust investigations into Apple, three of which involve the App Store.
In June, Apple published a 16-page report that defended its tightly policed App Store, and explained why allowing iOS users to install third-party apps would be a huge security risk for users.
On Monday, Apple became the world's first company to hit a market capitalisation of $3 trillion. It passed the $1 trillion threshold in August 2018 and became a $2 trillion company in August 2020.
Alphabet, Google's parent company, has a market valuation of around $2 trillion