The US Justice Department has filed an antitrust suit against Google accusing it of having a monopoly in online search and search advertising.
Companies don’t come much bigger than Apple or Google/Aphabet. While Apple has a market capitalization of more than two trillion dollars, Google/Alphabet’s market capitalization exceeds one trillion dollars.
They compete against each other in some ways — smartphone hardware, maps and car infotainment systems. Google’s Android, after all, offers an alternative to iOS and most of the world’s smartphones run on Android.
Curiously, they are friends as well as enemies.
While they are busily competing in smartphone hardware and the app ecosystem — each makes billions from their app stores — they are also dependent on each other. Google pays Apple billions of dollars every year to have Google stay as the default search engine on iPhones. Siri uses Google search as well.
US Justice Department Antitrust Suit Lays It Bare
This “arrangement” — which Google coyly describes as “partner agreements” — has earned Apple billions of dollars that are pure and simple cash profit. This is now out in the open as the US Justice Department has accused Google of having a monopoly in search.
“For many years,” the agency said in its 57-page complaint filed in the US District Court in the District of Columbia, “Google has used anticompetitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising and general search text advertising — the cornerstones of its empire.”
This follows a sprawling report released by the US House Judiciary Committee that also accused Google of controlling a monopoly over online search and online search advertising.
How Google And Apple Help Each Other
According to the Justice Department, Google estimates that 50 per cent of its search traffic originated on Apple devices in 2019. It pays Apple an estimated eight to 12 billion dollars a year to remain the default option on iPhones, iPads, and Macs.
Inside Google, losing the default search engine status on Apple devices is considered a “Code Red.” Google’s payments make up about 15 to 20 per cent of Apple’s profits.
Google argues in a blog post that it is not tough to change the default search engine settings on devices and computers.
This partnership — now in some jeopardy — has been going strong for 15 years. Apple has been as coy about earning money from Google as Google has been about revealing the fact that it pays money to Apple.
Steve Jobs And Tim Cook on Google And Android
Steve Jobs and his successor Tim Cook have been reliably against Google and Android devices. While Steve Jobs had promised “thermonuclear war” against any Android hardware that will compete against iPhones, Tim Cook has often described Google’s method of capturing users’ browsing history, browsing habits and monetizing all that user data as “surveillance.”
Steve Jobs — Mentor?
While Mr Jobs was a famously temperamental boss, he was also somewhat friendly with Larry Page and Sergey Brin of Google. It began in 2005 when Google and Apple inked a deal to make Google the default search engine on Safari browsers in Apple Mac computers.
Mr Cook, then a deputy to Mr Jobs, quickly saw the money-making potential of this deal.
Most consumers prefer the Google search engine anyway and Apple merely had to facilitate that preference.
Google And Apple — Friends, Enemies, or Just Competitors
When the original Apple iPhone came around in 2007, Mr Jobs invited then Google CEO Eric Schmidt on to the stage for the initial iPhone launch event. Mr Schmidt was also a member of the board of directors of Apple.
Meanwhile, Google was at work developing the free Android software to run on smartphones. Mr Jobs was not pleased when he learned about this. “I’m going to destroy Android,” was how Mr Jobs reacted. “I will spend my last dying breath if I need to.”