A class-action lawsuit has been filed against Google, Apple, and the CEOs of both companies, accusing them of violating United States antitrust laws. The lawsuit, filed by California Crane School, claims that there is a deal between the two tech giants in which Apple has agreed to not compete against Google in the field of search engines.
“These powerful companies abused their size by unlawfully foreclosing and monopolizing major markets which in an otherwise free enterprise system would have created jobs, lowered prices, increased production, added new competitors, encouraged innovations, and increased the quality of services in the digital age,” Joseph M. Alioto from the Alioto Law Firm said in a press release. Alioto Law Firm is one of the law firms representing the plaintiffs in the case.
According to the complaint, Google has agreed to share its search engine profits with Apple, paying the latter millions of dollars every year. Meanwhile, Apple allegedly gives preferential treatment to Google across all its devices.
The executives of both companies hold secret meetings regularly. Both firms seek to suppress small competitors and foreclose any competition in the search market. They also try to acquire potential competitors, the lawsuit claims.
Due to such close cooperation between the two tech giants, online advertising rates are higher than what they would have been in a competitive system. The lawsuit asks the court to issue an injunction that prohibits any agreement between the two companies that involves them not competing with each other. Any preferential treatment given to Google in Apple devices or payments made by Google to Apple, for example, need to be prohibited as well, the lawsuit insists.
“The complaint also calls for the breakup of Google into separate and independent companies and the breakup of Apple into separate and independent companies in accordance with the precedent of the breakup of Standard Oil company into Exxon, Mobile, Conoco, Amoco, Sohio, Chevron, and others,” according to a press release.
Apple and Google’s monetary agreement which allows the Google search engine to be the default search option on Apple devices is no secret. Neither company has revealed how much money is transferred as part of the deal.
A 2020 report in the NYT estimated Google pays $8 to $12 billion annually. Another analyst believes Apple may have received up to $15 billion in 2021 from Google. Some calculate Google’s payment to make up roughly a fifth of Apple’s annual profits.
The U.S. Department of Justice (DOJ) has also filed a lawsuit against the two tech companies for the secret search engine deal between them. Filed in Oct. 2020, the DOJ complaint alleges Google to have maintained monopolies in the search and search advertising sectors unlawfully. For many years, Google has accounted for 90 percent of search traffic in the United States.
Google has entered into “exclusivity agreements” that forbid the pre-installation of any competing search service. Apple setting Google as the default search engine on its devices is also unlawful.
Using its monopoly power, Google buys “preferential treatment” for its search engine in web browsers, devices, and other search engine access points. This creates a “continuous and self-reinforcing cycle” of monopolization, the DOJ said in a press release.
“Since my confirmation, I have prioritized the Department’s review of online market-leading platforms to ensure that our technology industries remain competitive. This lawsuit strikes at the heart of Google’s grip over the internet for millions of American consumers, advertisers, small businesses, and entrepreneurs beholden to an unlawful monopolist,” Attorney General William Barr said at that time.