Google & Apple Claim To Work As “One Company” In $12 Billion Deal, Antitrust Suit Reveals
The US government’s antitrust lawsuit against search engine behemoth Google has unearthed details of a secret $12 billion deal it inked with Apple to promote its web browser.
The landmark case found the tech giant pays Apple between US$8 billion and US$12 billion to make Google the default search engine on iPhones and other Apple devices.
This deal represents around a fifth of Apple’s worldwide net income, according to the lawsuit.
It also claims Apple CEO Tim Cook and Google CEO Sundar Pichai met in 2018 to discuss the multi-billion dollar deal.
After the 2018 meeting, an unidentified Apple employee wrote to a Google counterpart, stating: “our vision is that we work as if we are one company”, the lawsuit alleges.
The Department of Justice also cited internal Google documents which called the lucrative Apple deal a “significant revenue channel” which, if lost, would result in a “Code Red” situation.
According to the lawsuit, nearly half of Google’s search traffic originated from an Apple product in 2019.
The details of this deal, which have not been made public until this week, support the government’s allegation that Google abused its monopoly power to block out other search rivals and snuff out consumer choice.
Apple CEO Tim Cook and Google CEO Sundar Pichai
“By paying Apple a portion of the monopoly rents extracted from advertisers, Google has aligned Apple’s financial incentives with its own and set the price of bidding for distribution extremely high,” the DOJ said.
11 US states have supported the DOJ in its lawsuit, making it the biggest legal hurdle Google has faced in its 22-year existence.
Google has openly defended the antitrust lawsuit with a public statement on its blog, calling the claims “dubious” and “deeply flawed”.
The tech giant has used the analogy of cereal brands to defend the practise of paying companies such as Apple and Samsung to feature Google’s search engine browser.
“Yes, like countless other businesses, we pay to promote our services, just like a cereal brand might pay a supermarket to stock its products at the end of a row or on a shelf at eye level. For digital services, when you first buy a device, it has a kind of home screen ‘eye level shelf’,” Kent Walker, SVP of Global Affairs at Google, wrote in a blogpost.
“On mobile, that shelf is controlled by Apple, as well as companies like AT&T, Verizon, Samsung and LG. On desktop computers, that shelf space is overwhelmingly controlled by Microsoft.