Google’s Default Search Engine Fee to Apple Could Be Revealed

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It’s an open secret that Google pays Apple billions of dollars every year to be the default search engine on Apple devices. In other words, the search engine that is used when you simply type your search term into the combined address/search bar.

Neither company discloses the amount, which has led to various estimates over the years. But a new class action lawsuit could reveal the real sums…

Fund

Being the default search engine on iPhone, iPad, and Mac means a lot to Google because relatively few people change the default. This means that Google gets a lot of its search traffic from Apple users, and therefore the ability to place ads in front of them.

Add to that the fact that Apple customers are a particularly valuable demographic, and you’ll see why Google would be willing to pay big bucks to maintain the status quo.

One of the most recent estimates of the sum came from Bernstein.

Bernstein analysts estimate that Google’s payment to Apple will increase to $15 billion in 2021, and between $18 billion and $20 billion in 2022. The data is based on “disclosures in Apple’s public filings as well as a bottom-up analysis of Google’s TAC”. (traffic acquisition costs) payments.

Default Search Engine Class Action

A class action was filed, claiming the arrangement is detrimental to both competing search companies and companies that place ads with Google. He further alleges that the deal violates antitrust laws.

California Crane School, Inc. Filed Antitrust Class Action Lawsuit [3:21-cv-10001, C.C.S.I. v Google LLC] on 12/27/21 against Google and Apple and the CEOs of both companies alleging violations of United States antitrust laws.

The lawsuit accuses Google and Apple of agreeing that Apple would not compete with Google in Internet search. The complaint claims that the means used to enforce the non-competition agreement included; (1) Google would share its search profits with Apple; (2) Apple would grant preferential treatment to Google for all Apple devices; (3) regular secret meetings between the leaders of the two companies; (4) multi-billion dollar annual payments by Google to Apple for not competing in the search business; (5) suppression of competition from smaller competitors and foreclosure of competitors from the search market; (6) acquisition of actual and potential competitors. The complaint alleges that advertising rates are higher than they would be in a competitive system. The lawsuit seeks restitution of billions of dollars paid by Google to Apple.

Complaint seeks injunction barring non-competition agreement between Google and Apple; the profit-sharing agreement; Google’s preferential treatment on Apple devices; and the payment of billions of dollars by Google to Apple.

Consumers can be said to be indirectly harmed because higher advertising costs will pass through to higher product prices.

The lawsuit also calls for the splitting of Apple and Google into smaller companies.

Discovery would likely reveal the amount paid

If the lawsuit proceeds to the discovery process, it would likely lead to the disclosure of the actual amounts paid to Apple.

Discovery is a pre-trial procedure in which each party has the right to request relevant information from the other, both through the release of otherwise confidential documents and through interviews with company officials. Details of the sums actually paid appear to be extremely relevant to the case, and therefore almost certainly requested.

It should be noted, however, that many class actions do not make it to trial, or even to the discovery phase. Lawsuits can be settled at an early stage, and defendants can also file motions to have lawsuits dismissed before they progress.

The lawsuit is being brought by a relatively small firm, so its progress will likely depend in part on the lawyers’ ability to recruit big names.

Going through MacRumors. Photo: Solen Feyissa/Unsplash.

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