Apple and Google and their respective bosses have been sued in the USA because they have allegedly agreed to a search cartel for the iPhone. The first plaintiff, a commercial Californian school that is looking for other victims, claims that Google pays Apple to not enter the search business itself and earns billions with it. This violates American antitrust law.
Apple collects billions
The process attacks the fact that Google has been paying Apple large amounts for years to be the standard search in the Safari browser on iPhone, iPad and Mac. According to analyst estimates, Apple is said to have received US $ 10 billion in 2020, and it is said to have been up to US $ 15 billion in 2021. The sum contributes high profits to Apple’s increasingly lucrative service business. In 2022, Google reportedly budgeted 18 to 20 billion dollars for so-called Traffic Acquisition Costs (TAC) at Apple.
According to the class action (3: 21-cv-10001, CCSI v Google LLC), Google’s payment effectively means that Apple does not become a competitor in the search area, i.e. does not set up its own search engine, for example. The agreement ensures that Google shares its search profits with Apple, receives “preferential treatment” on all Apple devices and that competition from smaller companies is suppressed. The partners also bought up potential competitors and had regular “secret agreements” with one another. The system ensures that the advertising prices are higher than in a free search market. Users can choose the search engine themselves, but many leave the default setting.
Splitting like Standard Oil
the Plaintiff now want to achieve that the search cooperation is banned. Furthermore, Google and Apple are to be broken up into “separate and independent companies”, similar to what is done in other antitrust cases such as at the former Standard Oil Company did. The plaintiffs’ attorney said in a statement that “these powerful companies” were abusing their size and monopolizing large markets that would otherwise have created jobs and lower prices in a free system. It is unclear what chances the procedure has. Both Apple and Google are regularly affected by class actions – the fact that they are approached together as partners is a new development.