An antitrust suit has been filed against Apple and Google for conspiracy to use Google as the default search engine on Apple devices. Corporations are accused of anti-competitive behavior, and for this they could face splitting into many small companies. This is what the US Congress is seeking as well.
New antitrust scandal
Google and Apple are at the center of an antitrust scandal. The companies are accused of conspiracy concerning the Google search service and Apple devices. Now they are threatened with fragmentation into small firms.
As the portal PRNewsWire writes, the fact of collusion between the American IT giants is mentioned in the antitrust lawsuit against them, filed by the California Crane School. The plaintiff claims that Apple is receiving considerable compensation for using Google in the iPhone, iPad and other gadgets of the company as the default search engine. Google also allegedly regularly rewards Apple for its refusal to develop its own service for finding information on the Internet.
The statement of claim states that Apple receives royalties as a portion of the profits generated by Google from its online searches. The document also contains information on regular secret meetings of former heads of corporations and repeated attempts to suppress and take over smaller competitors.
The plaintiff claims that Google paid Apple over $ 50 billion just to keep it from bringing its own search engine to market. Also, the Internet giant is accused of abusing its dominant position in this segment. The document provides statistics for September 2020, according to which Google held 94% and 82% of the global mobile and desktop search engine markets, respectively.
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According to StatCounter, over the past time, Google has strengthened its position in both segments. As of December 2021, its shares in them were 94.87% and 86.22%, respectively.
It all started with Steve Jobs
The California Crane School estimates that the collusion between Google and Apple has existed for about 20 years. In their lawsuit, the lawyers of the educational institution argue that the foundations of “cooperation” were laid by the former head of Google Eric Schmidt (Eric Schmidt) and Apple founder Steve Jobs (Steve Jobs), who passed away in October 2011
Lawyers say that Schmidt and Jobs held several secret meetings, during which a plan for mutually beneficial cooperation between the two IT corporations was developed. At the same time, the terms of such a partnership were also developed – Google deducts part of the funds from the earnings from advertising traffic in its search engine to Apple, and that, in turn, makes Google the default search engine on its devices.
The plaintiff is sure that in 2021 the amount of payments amounted to within $ 15 billion.An analyst of the research company Bernstein Research spoke about exactly the same amount in August 2021. Tony Sacconagi (Toni Sacconaghi). According to him, this is one and a half times more deductions for 2020.
No companies – no problem
According to lawyers at California Crane School, the collusion between Apple and Google has led, at the very least, to higher prices for online advertising. Suppression of competition by squeezing out smaller companies from the market is one of the reasons for this.
The plaintiff, California Crane School, is seeking multi-billion dollar damages from the companies for all payments made under the multi-year agreement. He also wants to prohibit Apple and Google from entering into a non-competition agreement and transferring part of Google’s profits from online advertising to Apple’s account.
In addition, the plaintiff calls for the destruction of both Google and Apple as whole corporations by splitting them up into smaller firms. As an example, they cited the oil company Standard Oil, which at the beginning of the 20th century formed a full-fledged oil monopoly on the market. It used various anti-competitive methods of fighting for the market, but paid for this by forced fragmentation into small companies.
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Such a verdict was passed in 1911 by the US Supreme Court. As a result, Standard Oil was split into 34 companies, including Exxon, Socony, Conoco, Amoco and others. It should be noted that Exxon and Socony, renamed Mobil, merged with Exxon in 1999. The new company is now known as ExxonMobil.
The threat of separation is real
The likelihood of satisfying the plaintiff’s claim to split Apple and Google into small companies is not only non-zero – it is quite high. The U.S. Congress is pushing for this too – back in October 2020, it published a nearly 450-page document detailing why they needed to be fragmented.
In short – Congress wants to get rid of giant corporations in the market for antitrust reasons. Not only Apple and Google can be split, but also Facebook, since October 2021 known as Meta, and Amazon.
And if California Crane School cited an oil company as an example of a monopoly division, the US Congress mentioned a company directly related to the IT market. We are talking about a large American telecom operator AT&T, which was declared a monopoly in 1982. The investigation was initiated by the US Department of Justice in 1974 and lasted eight years.
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The split took place on January 1, 1984, when AT&T was split into AT&T Communications (which provides long distance services) and as many as seven regional telephone companies. As a result, the company’s assets were reduced by about five times.
Not everything is so simple
Apple, which has been accused of receiving compensation for refusing to create its own internet search engine, has in fact tried to enter the market on several occasions. For example, at the beginning of the 21st century, the company was developing appropriate technologies and hiring specialists in this area. However, in the end, everything was limited to the emergence of Spotlight – an internal file search system in macOS, and later in iOS. It first started working in 2006 on macOS 10.4 Tiger.
In 2009, there was information about Apple’s second attempt to create its own online search engine. The rumors were only half true – Apple did work on a search engine. However, instead of a web service, she created an internal search in iTunes and the branded App Store for iPhone, iPad, and then Mac.
In August 2020, CNews wrote that Apple is working on an online search engine again. This was indicated by several facts at once, among which was the complete independence of Apple from Google money. And then, and now Apple is the most valuable company in the world, and Google royalties are not its main income, but only a source of additional income.
However, nearly a year and a half after that, Apple still hasn’t launched its own web search. There is no information whether she continues to work in this direction, or whether she is completely satisfied with the cooperation with Google.