Apple Subpoenaed for Details on iOS Search Deal in Google Antitrust Investigation

[wackymacky]

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9B179 Safari/7534.48.3)

Man, google pays 1 billion to be default search engine/ google wants too much for iPhoto using their maps

Samsung apple legal battle re device patients/ Samsung sole supplier of iPad 3 displays.

Can't the CEOs sit down and sort them out rather than giving the law firms millions.

 

[JAT]

They pay 10% tax just on sale, leaving the rest of the taxes alone.

I'm not sure what you are saying, here. If you mean sales tax, Apple (or any retailer) does not pay that, the end user (purchaser) does. Apple is required to collect and remit the tax, but it is not a cost to them. (unless they screw up and forget to collect it)

They do pay plenty in income taxes, per their income statements. There will always be people who say large corporations do not pay enough taxes, that would be the standard discussion point.

 

[MH01]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3_2 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8H7 Safari/6533.18.5)

What's the best engine ?

 

[haruhiko]

I have been on the Internet since 1995, since I was a teenager...

In the early days, there were several major search engines, none of which were perfect or gave relevant, properly weighted results. Sometimes you would have to use several search engines together to get the information you were looking for....

Those that I remember most:

• Yahoo
• Altavista (altavista.digital.com)
• Lycos
• Hotbot
• WebCrawler
• Excite

I went to San Francisco in 2000 for the Macworld Expo Conference. The morning of the keynote address, when I was in line waiting to enter the Moscone Center, this guy comes up to me, passing out flyers....he says: "Hey, we have this new start-up, we're a search engine and we're called Google, you should check us out!" This was the first time I had ever heard of Google -- January 5th, 2000. So then I checked out Google later that day and started using it. I was absolutely amazed at the accuracy, relevance, speed, and number of useful/valid results I was getting from this search engine -- Google. I started using Google as my default search engine from that point forward, and have not looked back. I was using this even before Apple put it as the default browser in Safari, or even before Safari was released, for that matter -- I was using Google with Mac OS 9.

All I can say about this, is that Google is the best, fastest, and largest search engine in the world...the database and the algorithms are still better than anything out there. The servers and network that power Google can handle the traffic and never choke up. They sort of do have a 'monopoly' in the search-engine world, but couldn't you say the same thing about Apple and the tablet market? Not one company makes a competitive product to the iPad, and nobody makes a search engine quite like Google. I don't see many people complaining about Google's search engine, because it serves it's purpose, and does a good job at it.

Apple may have "asked" for money from Google as part of the agreement, to allow Google to be featured as the default web browser option on iOS and Apple products (Safari). It is a two way street, Google may have offered, or Apple may have asked...anyhow both parties agreed on a deal and it was done.

Capatalism is a laissez-faire type of affair...a true free market should not be thwarted by a non-capatalistic regulatory system.

Yes. I used Altavista, Excite and Yahoo too, all of them sucked. Google was just like a breeze of fresh air in the chaos. I started to use it when everybody was using Yahoo. Their search engine is still the best now.

 

[iJays]

wish they released 128gb new iPad

 

[SBlue1]

they paid 1 billion??? wow...

 

[roasted]

Yeah, how about a legal.macrumors.com subdomain or at least a separate blog for the legal stuff?

If that would be the case, macrumors.com would be a ghost town, considering a substantial portion of the legal battles are Apple-driven to begin with.

 

[adbe]

If the Govt is going to look into Google being the go-to search engine on the iPhone, the best selling cellphone on the planet, then they should also look into why Apple forces its customers to use Safari as the default browser.

False equivalence.

 

[peadarmac]

The reason Google allegedly paid so much is because 2/3rd of mobile searches come from iOS. Google would hate to loose those search numbers to someone linke Bing.

 

[thewitt]

It bums me out that Apple takes 1B from Google. First, they don't need it.

Of course they do.

Google makes a great deal of money on their search engine, and Apple certainly enables that earning power by making Google the default search engine.

Both companies are in business to make money, and both are currently doing it very well.

 

[tbrinkma]

But why stop at the search engine? Microsoft got in crap for having Internet Explorer for being the default browser, so in that regard, shouldnt there be a similar issue with Safari for those of us who dont want it? I never use it in OS X and would rather see it gone, but I dont think Apple or Microsoft should be forced to not offer their own product alongside another of their own products as default.

Actually, for the record, Microsoft didn't get in trouble because they made IE the default browser. They got in trouble because they required, as a condition of supplying Windows to PC-makers, that IE be included, set as default, *and* that no other browser be pre-installed. It's that last part that is key, because it's leveraging a monopoly (Windows) not just to give your product an advantage, but to explicitly put the competition at a disadvantage by cutting off their available market.

Had Microsoft been smart enough to *just* include IE, they'd have been fine. It's requiring your customers to *not* deal with your competitors which gets into sticky territory.

The dissimilarity for Safari is that Apple is the one who is selling the hardware with Apple's software. They're not requiring anyone else on the market to *not* include competing browsers, they're just not supplying them themselves.

 

[faroZ06]

I'm not sure what you are saying, here. If you mean sales tax, Apple (or any retailer) does not pay that, the end user (purchaser) does. Apple is required to collect and remit the tax, but it is not a cost to them. (unless they screw up and forget to collect it)

They do pay plenty in income taxes, per their income statements. There will always be people who say large corporations do not pay enough taxes, that would be the standard discussion point.

They pass the tax onto the consumers in the form of an invisible price increase, but they still pay it. They are taxed for their sale.

 

[kdarling]

Google has been reported to have paid Apple $1 billion last year in the iOS search deal,

Wait. What? That link says the $1 billion amount was calculated this way:

"We know that Apple TAC is accounted for in the Google.com TAC line item reported each quarter by Google. For 2011, Google reported ~$1.5bn in total Google.com TAC.

Judging from quarterly reports, $1.5 billion a year for partnership deals, outside of regular ads, sounds correct. (TAC = Traffic Acquisition Costs = kickback for generating Google searches, btw.)

For modelling purposes, we assume that Apple represented ~66% of this TAC (though we acknowledge that this could be high), or $1bn.

Even the author admits this was pulled out of thin air. It would also assume that all the partnerships are based on mobile searches, which actually only make up something under 20% of Google searches. So this number is really flaky.

At a 75% TAC rate, this means that Google generated ~$1.3bn in gross search revenue through default search placement on Apple devices. "

That seems backwards. Google's regular TAC rate is known from their reports to be around 24%. Not sure how the author came up with 75% kickback to Apple.

A couple of years ago it was widely suggested that Apple was getting about 100 million a year in Google kickbacks, so it seems more like it should be around 250 million now.

I'm not saying that number is right either... who knows, perhaps Google pays Apple a ton extra to keep them from making Bing the default... but I think in the next few days we'll be seeing more analysts begin to question the original claim.

All I'm saying is, more people need to look at the sources for the news and try to understand their foundation.

 

[vrDrew]

All I'm saying is, more people need to look at the sources for the news and try to understand their foundation.

Good catch on the numbers. A billion dollars seems like a lot, especially if you figure that Google in total had less than $2 billion in mobile search revenue last year. Which brings into question the idea that mobile search is going to eclipse desktop anytime in the very near future....

 

[IJ Reilly]

Actually, for the record, Microsoft didn't get in trouble because they made IE the default browser. They got in trouble because they required, as a condition of supplying Windows to PC-makers, that IE be included, set as default, *and* that no other browser be pre-installed. It's that last part that is key, because it's leveraging a monopoly (Windows) not just to give your product an advantage, but to explicitly put the competition at a disadvantage by cutting off their available market.

Had Microsoft been smart enough to *just* include IE, they'd have been fine. It's requiring your customers to *not* deal with your competitors which gets into sticky territory.

The dissimilarity for Safari is that Apple is the one who is selling the hardware with Apple's software. They're not requiring anyone else on the market to *not* include competing browsers, they're just not supplying them themselves.

Correct, up to a point. Microsoft was found guilty of other noncompetitive acts in the browser market, such as withholding technical information from Netscape that Netscape needed to compete with Microsoft on the Windows platform. Microsoft was also found to have used their market power to deal in an anticompetitive way with other middleware threats, such as Java, and to have used their control over the pricing and availability of Windows to manipulate the OEMs in a variety of ways.

Apple is a long way from having to address similar issues where iOS is concerned, if for no other reason than the courts would need to find that iOS is a defined market before they could find that Apple has behaved anticompetitively in that market. Defining iOS as a market is complicated by the fact that all iOS products are made by Apple. This was obviously not the case for Microsoft and Windows, so it was easier to find that Microsoft was exerting illegal control over the IBM-PC market.

The e-books market may be an entirely different matter. It at least appears that Apple is using its dominant market position to set prices for e-books not only on their platform but others. This could be a real antitrust problem for Apple. I predict they will have to give up this strategy. It doesn't pass the smell test.

 

[kas23]

False equivalence.

I never said they were totally equivalent. Yes, they are different beasts, but they both are designed to stifle competition.

 

[JAT]

They pass the tax onto the consumers in the form of an invisible price increase, but they still pay it. They are taxed for their sale.

Which tax are you talking about? Again, if sales tax, that is 100% not true. (in the USA) A retailer the size of Apple, I'm sure sales tax doesn't even touch their income statement.

 

[IJ Reilly]

I never said they were totally equivalent. Yes, they are different beasts, but they both are designed to stifle competition.

In what market? Please be specific.

All antitrust law violation claims must be based on a company's activities within a defined market. A market defined by the company's own products probably isn't going to fly.

Of the things people tend to misunderstand about antitrust law, this is probably number one.

 

[faroZ06]

Which tax are you talking about? Again, if sales tax, that is 100% not true. (in the USA) A retailer the size of Apple, I'm sure sales tax doesn't even touch their income statement.

US sales tax. The business pays the tax on their sales. They make YOU pay it for them because otherwise, the shown price would have to be different in each state (and it would look more expensive).

And I would call 5-10% "touching". Also, a $200 iPhone is taxed at the $700 rate because the stupid government says that since it's subsidized by the carrier, it has to be taxed at the unsubsidized rate (even though the cell service is also taxed).

So here in California, Apple pays $70 per low-end iPhone to the gov't after you pay them the extra money for the tax.

 

[kas23]

In what market? Please be specific.

All antitrust law violation claims must be based on a company's activities within a defined market. A market defined by the company's own products probably isn't going to fly.

Of the things people tend to misunderstand about antitrust law, this is probably number one.

You're right. I got best selling cellphone mixed up with actually market share, which is actually dominated by Android phones.

 

[JAT]

US sales tax. The business pays the tax on their sales. They make YOU pay it for them because otherwise, the shown price would have to be different in each state (and it would look more expensive).

And I would call 5-10% "touching". Also, a $200 iPhone is taxed at the $700 rate because the stupid government says that since it's subsidized by the carrier, it has to be taxed at the unsubsidized rate (even though the cell service is also taxed).

So here in California, Apple pays $70 per low-end iPhone to the gov't after you pay them the extra money for the tax.

Re: the bold. That is not why it exists, or how retailers consider it. You have gotten your understanding by backing into the prices, that is incorrect. They are expressly prohibited from raising prices to cover sales tax (although I'm sure some do that), they must charge it separately or place a sign saying it is included, such as at concession stands at a ballpark. Also, if they sell to a person outside any taxing jurisdiction in which they are registered, they don't charge or pay tax. Like Amazon to most states.

The purpose of sales tax is to tax the end user, not the company selling or making the product. Of course, different states have slightly different rules.

Should I bother explaining the accounting? Businesses do not consider sales tax collected to be an expense. Ever. It goes on the balance sheet instead, until remitted to the state. (or city)

Although I do see that Delaware operates in the manner you suggest. Maybe you're from there? The other states do not operate like that.

 

[noahrobd]

Oh the irony...

Google rivals such as Microsoft Corp. (MSFT) have criticized these agreements as anticompetitive.

I find it highly ironic every time Microsoft calls a company out, complains or criticizes about one of their competitors being anti-competitive, monopolistic or any other way corrupt, unethical, underhanded, etc., which they've been doing a lot of lately (complaining that is.) Yet in the 80's, 90's early 2000's when Microsoft was the worst offender (blatantly stealing intellectual property from other companies, engaging in monopolistic and anti-competitive practices, using underhanded means to put competitors at a disadvantage and drive them out of business, and the litany of things goes on), Microsoft argued that they were doing nothing wrong. They even argued that what they were doing was good for innovation. They were full of sh__ at that time.

I think Microsoft is just mad that that they were so criticized/scrutinized for their unethical business practices back in the day (which is how they were able to become such a monopoly with such sh__y products), that now they're just complaining about any other company that could even remotely be considered to be doing anything wrong, because "it just isn't fair. How come they're allowed to get away with it. We got in trouble, so we want to make sure everyone else gets in trouble too."

In reality what Microsoft engaged in is far worse. And while they were brought to court and under legal action several times, I don't know that they ever really got penalties. The case with the justice department, which was in the middle of, seemed to have somehow just disappeared when G.W. Bush replaced Clinton in office. As I recall, they were only ever required to stop building IE into Windows, and that was it.

So Microsoft is just being soar they weren't able to get away with more without themselves being criticized or called out on it. Yet while they're accusing others of the same thing they used to do, I bet they would still say they never did anything wrong back then. Which is why it's ironic and Microsoft is hypocrites.

 

[IJ Reilly]

So Microsoft is just being soar they weren't able to get away with more without themselves being criticized or called out on it. Yet while they're accusing others of the same thing they used to do, I bet they would still say they never did anything wrong back then. Which is why it's ironic and Microsoft is hypocrites.

If you are expecting consistency then you are going to be disappointed. These companies act in their own best interests. They can be unalterably opposed to antitrust law enforcement one day, and pleading for it the next. It's all about what is best for them that day and in that situation.

 

[charlituna]

Endless legal matters are getting boring

Yeah, how about a legal.macrumors.com subdomain or at least a separate blog for the legal stuff?

if it bores you so much why did you bother to click on the link to see the article and/or post about it.

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I believe the question is how much Google paid. And did other companies offered to pay more.

the issue might have nothing to do with money but other terms. Look for example at the whole Apple/Amazon thing right now. Supposedly at issue isn't that Apple lets publishers set the cost or even the agency model, but the fact that Apple won't allow you to set a lower cost somewhere else.

By the same token, Google could have set a term in the contract that they must be the default and/or no one is allowed a better deal to be included than they get and so on. And THAT could be where the anti-trust is coming into play.

It's also possible that they are looking at terms to see if Google tried to play tricks with deals across markets, like perhaps the deal to make Google the default in Safari including terms that that meant all versions of Safari no matter what type of device the software was running on. maybe even in addition to the other examples mentioned

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Remember back in the 90's when Microsoft got in legal trouble for using Internet Explorer as the default browser for Windows?

That isn't why Microsoft got into trouble. They got into trouble for forcing IE on OEMs and also prohibiting them from installing anything else as a condition of the OEM license. As well as refusing to let Netscape etc have access to details about Windows and trying to sue them for reverse engineering the OS themselves (which is actually a fair use exemption)

----------

So then I checked out Google later that day and started using it. I was absolutely amazed at the accuracy, relevance, speed, and number of useful/valid results I was getting from this search engine -- Google. I started using Google as my default search engine from that point forward, and have not looked back.

And then they tried to be everything to everyone and forgot about their original game of just being a search engine, being the best search engine in fact.

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I think what you're talking about is called a "Mon-AAPL-ly"

edit: Yep, Apple is up $16.10 today.

it's not illegal to have a high stock price or to have a monopoly.

it's only illegal how you got there and what you do once you are there.

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then they should also look into why Apple forces its customers to use Safari as the default browser.

there are no laws against vertical integration. Especially when it is just in terms of defaults and nothing is blocking you from putting (for example) Firefox on your computer or Sparrow on your iPhone

 

[faroZ06]

Re: the bold. That is not why it exists, or how retailers consider it. You have gotten your understanding by backing into the prices, that is incorrect. They are expressly prohibited from raising prices to cover sales tax (although I'm sure some do that), they must charge it separately or place a sign saying it is included, such as at concession stands at a ballpark. Also, if they sell to a person outside any taxing jurisdiction in which they are registered, they don't charge or pay tax. Like Amazon to most states.

The purpose of sales tax is to tax the end user, not the company selling or making the product. Of course, different states have slightly different rules.

Should I bother explaining the accounting? Businesses do not consider sales tax collected to be an expense. Ever. It goes on the balance sheet instead, until remitted to the state. (or city)

Although I do see that Delaware operates in the manner you suggest. Maybe you're from there? The other states do not operate like that.

Whether it's meant to tax the business or the consumer, it taxes the business by making the price higher. The effect would be the same either way, less money for the business because they have to sell it at a price people would buy it at.

But I'm pretty sure the sales tax is on the companies. It's not like the consumers include items bought in their tax forms.

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It's not antitrust to have a default search engine or a default web browser!

Geez, Microsoft, stop making Bing default in IE. (just kidding)

Geez, Microsoft, stop getting people to use ActiveX, which is IE-only. (not kidding)