From Rob Copeland and Tim Higgins’ “Google’s Exclusive Search Deals With Apple at Heart of U.S. Lawsuit” ($) in Wednesday’s Wall Street Journal:
Google’s partnership with Apple is at the heart of the U.S. Department of Justice antitrust lawsuit claiming that the Alphabet Inc. unit misused its power in an anticompetitive manner, potentially threatening a major revenue stream for both tech giants.
It has long been known that Google relies on search traffic from Apple’s popular line of phones. Google’s flagship search engine is the preset default on Apple’s Safari phone browser, meaning that when consumers enter a term on their phone, they are automatically fed Google search results—and related advertising.
What’s new is just how central it is to both companies, and to the antitrust case. While the government stopped short Tuesday of asking for specific remedies, the prominence of the Apple arrangement in the lawsuit leaves little doubt that the Justice Department will seek to intercede.
The government says that Apple CEO Tim Cook and Google’s CEO Sundar Pichai—neither of whom are named in the lawsuit—met in 2018 to discuss how the companies could work together to drive search-revenue growth.
Afterward, according to the lawsuit, a senior Apple executive followed up with a Google counterpart with some encouraging words: “Our vision is that we work as if we are one company.”
The companies declined to comment on the alleged meeting. The apparent friendliness is a change—Apple’s late co-founder Steve Jobs and former Google Chief Executive Eric Schmidt famously fell out over Google’s launch of competing mobile software.
Though Google and Apple have been tight-lipped on how much their deal is worth, the lawsuit projects that it accounts for between 15% and 20% of Apple’s annual profits.
My take: Easier for Apple to find a new search engine than for Google find a new lock on its search monopoly.
For the full text of the lawsuit, click here.