According to a new class action, Apple will not develop its own internet search engine unless it is paid to remain the default option in the browser.
The lawsuit was filed in a California court against Apple, Google, and their respective CEOs, accusing them of violating US antitrust laws.
The complaint accuses Tim Cook and Sundar Pichai of participating in "regular secret meetings" in which they agree to share profits with Apple if it is given preferential treatment.
According to the class action, Apple is paid annual multi-billion-dollar payments based on an agreement that Apple won't launch its own competing search engine and that the non-compete agreement includes active suppression of smaller competitors.
Advertising rates are higher than in a competitive system, according to the complaint. It wants an injunction against the non-compete agreement between Apple and Google, a cessation of the profit-sharing agreement and preferential treatment, and an end to the multi-billion dollar payments.
The complaint calls for the break up of Apple into separate and independent companies in line with the precedent of the break up of Standard Oil company into Exxon, Mobile, Conoco, Amoco, Sohio, and others.
It's no secret that Apple and Google have a huge monetary agreement that ensures that Google is the default search engine on Apple devices. It's rumored that the cost of being the default search engine on Apple devices in the United States, the United Kingdom, and other countries is in the billions.
According to The New York Times, Apple will get an estimated 12 billion dollars per year in exchange for giving up its default search function. According to one analyst, the payment by the search engine to Apple in 2021 may be as high as 15 billion dollars.
This is believed to be the single biggest payment made to anyone, and could account for up to a fifth of Apple's annual profits. The US Justice Department claims that the deal is representative of illegal tactics used to protect Google's monopoly and stifle competition.
The UK Competition and Markets Authority has called the arrangement a significant barrier to entry and expansion for rivals in the search engine market, and in 2020 asked for enforcement authorities to be provided with a range of options to address the deal between Apple and Google to provide a more level playing field.
"These powerful companies abused their size by foreclosing and monopolizing major markets which in an otherwise free enterprise system would have created jobs, lowered prices, increased production, added new competitors," said lawyer Joseph M Alioto.
Apple and Google would likely argue that users can use other search engines in the browser, including Microsoft's Bing, Yahoo, and DuckDuckGo, if they so choose.
Apple would likely point out that it is already in the business of search engines and maintains an active web crawler called Applebot. The crawler mainly operates in the background to improve the results of search queries, although it has been speculated that Apple is stepping up efforts to develop its own search technology should its agreement with Google become incompatible with antitrust laws.
