Google and Apple's Search Engine Deal Violates Antitrust Law

[MacRumors]

The paid agreement that Google has with Apple to be the default search engine on the iPhone and other Apple devices violates antitrust law, a federal judge ruled today (via Bloomberg).

Google has long paid Apple billions of dollars a year to be the default Safari search engine, and this relationship has been under scrutiny as Google battles antitrust allegations made by the United States Justice Department. The court today found in favor of the DoJ, and said that Google is indeed shutting out competition by paying smartphone makers for default status.

Google's agreements with Apple and other smartphone makers have a "significant effect" maintaining Google's search monopoly, keeping other search engines from competing and reinforcing Google's dominant position. Google has a search market share of around 95 percent on smartphones, in part due to the money that it pays.

In 2022, Google paid Apple $20 billion, an amount that incentivizes Apple to stick with the status quo. Apple does not provide opportunities to other search engines, nor does it develop its own search product due to the money that it receives from Google, according to the DoJ.

After considering testimony from Apple, Google, Microsoft, and other companies, the court decided that Google has a search monopoly. "Google is a monopolist, and it has acted as one to maintain its monopoly. It has violated Section 2 of the Sherman Act," reads the ruling.

The court will need to decide on the next actions to take to address Google's anticompetitive practices, and injunctions could be forthcoming.

Google and Apple could in the future be barred from entering into search agreements, which will result in a revenue loss for both companies. Apple will not get billions for promoting Google Search, and Google will lose out on being the default option across billions of Apple devices.

In a statement provided to MacRumors, Google's president of global affairs Kent Walker said that Google will appeal the decision.

This decision recognizes that Google offers the best search engine, but concludes that we shouldn't be allowed to make it easily available. We appreciate the Court's finding that Google is "the industry's highest quality search engine, which has earned Google the trust of hundreds of millions of daily users", that Google "has long been the best search engine, particularly on mobile devices", "has continued to innovate in search" and that "Apple and Mozilla occasionally assess Google's search quality relative to its rivals and find Google's to be superior." Given this, and that people are increasingly looking for information in more and more ways, we plan to appeal. As this process continues, we will remain focused on making products that people find helpful and easy to use.

With an appeal planned, the DoJ vs. Google antitrust lawsuit over search will likely take several more months to resolve.


Article Link: Google and Apple's Search Engine Deal Violates Antitrust Law

 

[carniesandrubes]

Seems like worse news for Apple. They lose tens of billions but the vast, vast majority will still make Google their default search engine.

 

[Think|Different]

I am sure Tim will still find some structure where Google still pays billions but now others can and will "get to," too. Brilliant.

 

[Zshrc]

Imagine what this means to Mozilla... bye bye Firefox

 

[klasma]

Seems like worse news for Apple. They lose tens of billions but the vast, vast majority will still make Google their default search engine.

I never understood why Google has been paying them so much in the first place. Maybe to detract Apple from developing a search engine of their own.

 

[spazzcat]

Seems like worse news for Apple. They lose tens of billions but the vast, vast majority will still make Google their default search engine.

It was less than 5% of their revenue last quarter, it’s a chuck, but I think Apple will be ok.

 

[falkon-engine]

If the government prevailed against Google (anti trust), might it also prevail against Apple?

 

[macduke]

Hopefully this will lead to more competition and Apple pulling their search engine out of mothballs to get that project rolling again.

What's funny is the entire reason Google built Android was to lock in search on mobile, and if I'm reading this correctly, now it seems like they won't even be able to do that with Android devices moving forward, right?

In a few years will we see Android listed on killedbygoogle.com? Because I don't see how it makes them very much money without search lock-in. Although Android is already forked and could continue to be worked on, but without Google behind it, I see the platform fragmenting pretty quickly.

 

[ItsASpider]

...and there goes a good chunk of Apple's profit margin.

Well... let's not pretend they didn't know what they were doing was wrong. Everyone involved here sucks, lets hope Mozilla can stay afloat through it.

 

[zilchfox]

That is the exact same violation as United States v. Microsoft in 2001 because of Internet Explorer — Section 2 of the Sherman Act.

This is huge.

United States v. Microsoft Corp. - Wikipedia

en.m.wikipedia.org

 

[spazzcat]

I never understood why Google has been paying them so much in the first place. Maybe to detract Apple from developing a search engine of their own.

We don't know whap Apple was about to change that made Google pay them off.

 

[klasma]

Imagine what this means to Mozilla... bye bye Firefox

They are paying Mozilla to ensure competition, so it's kinda the opposite.

 

[hieranonymous]

I never understood why Google has been paying them so much in the first place. Maybe to detract Apple from developing a search engine of their own.

Because sixty percent of Google’s total traffic comes from Apple devices. Apple drives more traffic to Google’s services than Windows and Android combined.

 

[zilchfox]

Seems like worse news for Apple. They lose tens of billions but the vast, vast majority will still make Google their default search engine.

Google has absolutely sucked lately, littered with promoted ads on the first page. It’s a way better experience with other search engines.

 

[MilaM]

It was less than 5% of their revenue last quarter, it’s a chuck, but I think Apple will be ok.

5 % of revenue that has a gross margin of 100 %. It's a lot of money, even at Apple's scale.

Unless a competitor wants to pay a similar amount, which I doubt, the next best thing for Apple would be to create a competing search engine and then sell ads. Which would make Apple an advertising company and in a bad way make iOS and Android the same type of business 🥺.

 

[klasma]

We don't know whap Apple was about to change that made Google pay them off.

Most users would want to use Google search anyway, and it would be suicidal for Apple to meaningfully block that.

 

[Premium1]

So what will change other than Apple losing out on billions of dollars? What other search engine is going to be able to pony up that amount of money? This seems a win for Google since they won't have to pay anymore and most will still choose them as the default search engine.

 

[Realityck]

Google and Apple could in the future be barred from entering into search agreements, which will result in a revenue loss for both companies. Apple will not get billions for promoting Google Search, and Google will lose out on being the default option across billions of Apple devices.

So we see Apple quickly switch to some random search engine algorithm so no search engine is favored by default, let the users override that. Using DuckDuckGo anyway most of the time.

 

[applefanboysince93]

So did Buffet get tipped about the ruling?!

 

[spazzcat]

Most users would want to use Google search anyway, and it would be suicidal for Apple to meaningfully block that.

How many people know there are other search engines? Think about it: if there was a popup the first time you set up your new phone to pick your search engine.

 

[coffeemilktea]

"Google is a monopolist, and it has acted as one to maintain its monopoly. It has violated Section 2 of the Sherman Act," reads the ruling.

Imagine if the government decides to break up Google since they're a monopoly? The timing of this — right as Chrome gives warnings about how adblockers like uBlock Origin won't work anymore because of Google pushing Manifest V3 specifically to make it hard to block ads — brings me immense satisfaction.

 

[con2apple]

In the end, Google will win.
Just as Apple does not have a monopoly on apps or an app store (after all, anyone can use Android), Google does not have a monopoly on the search engine. After all, everyone can choose from dozens of alternatives.

Isn't that right, or is it something else now?

 

[satchmo]

Won’t AI in some form be the future of search anyway?

 

[Darmok N Jalad]

Yeah, Apple loses an easy $20B, and now I’m sure they’ll have to do a search engine ballot on first setup. If Apple was smart, they knew that gravy train was headed to dry dock someday and planned accordingly.

 

[spazzcat]

In the end, Google will win.
Just as Apple does not have a monopoly on apps or an app store (after all, anyone can use Android), Google does not have a monopoly on the search engine. After all, everyone can choose from dozens of alternatives.

Isn't that right, or is it something else now?

Guessing the percentage of users using Google Search puts them in the monopoly range like MS was in the 90s.