Google Paid Apple to Stay Out of the Search Business, Lawsuit Claims

At this point, it is a bit of an open secret that Apple pays billions of dollars each year to remain the default search engine on their computers. A new class-action suit claims that tech titans dealings go even farther than that. An antitrust case was filed in California this week accusing Apple of unfairly giving a top slot on its devices to search engine competitor, and the company of agreeing to forgo any plans to develop a search engine of its own to avoid competing with its deep-pocketed.

The exact dollar amount paid to Apple in exchange for not entering the search business is not named in the suit. The suit alleges that Apple was paid $50 billion by Google not to compete in search.

The suit says that the meetings were to promote the idea that Apple and Google would act as one company. The word co-opetitive was invented by Apple and Google.

There is more to that. According to the suit, Apple and Google signed a non-compete agreement that allowed the two companies to share profits from search ads. According to the suit, this non-compete also mandates that Apple "actively suppress" smaller search engine competitors like Bing or DuckDuckGo by making them the default search engine for Apple's Safari browser, for example. The two companies would engage in the tried and true practice of acquiring companies before they became too much of a problem. Over the past 22 years, the suit claims Apple has acquired more than 120 competitors and potential competitors.

The suit says that the competitors will not be able to compete without adequate scale.

The agreement between Apple and Google makes it difficult for other companies to compete against them. If the agreement between Apple and Google were to be dissolved, that economic prohibition would be gone.

The suit wants all the agreements made over the past two decades to be declared void. It asks the courts to require Apple to pay back any ill-gotten gains earned as part of the former's agreement not to roll out its own search engine. The duo has non-compete agreements, profit-sharing agreements, and any other agreements that result in preferential treatment of their products on Apple's hardware.

According to the suit, there are more things that need to be done. The court should restructure the structure and size of the companies that were abused to commit these violations by divvying them up into smaller companies. The Standard Oil case, which took place in 1911, saw the Standard company divided into 34 separate entities under the Sherman Antitrust Act, and those entities eventually became known as Exxon, Chevron, and so on.

This isn't the first time that a lawsuit has brought the Sherman act as part of their argument for breaking up a Silicon Valley company, but that doesn't mean the comparisons between Big Tech and Big Oil are justified. It is difficult to point to similar impacts on the consumer market that uses Apple or Google products, since Standard Oil's case offered a clear case where one company's monopoly directly led to consumer harm via spiked gas prices.

The current suit states that the most direct harm is to advertisers, and that the absence of the Apple agreement would cause higher prices to advertisers.

It is a point that echoes other anticompetitive claims being made by lawmakers and advertisers alike against the search giant over the past year, specifically allegations of covert ad price-fixing schemes that were cooked up alongside fellow tech giant Facebook. The harms that are named in those cases are a blow to advertisers and online users, not the users who surf the search engine. If this new suit wants to have legs, it will need to figure out how to hurt those users.

We reached out to both Apple and Google about the suit and will update this piece when we hear back.