A landmark antitrust complaint has been issued, which sees the United States Justice Department targeting a lucrative and supposedly secretive deal between Silicon Valley giants: Google and Apple.
This is one of the U.S.' largest antitrust lawsuits and was first reported by the New York Times (NYT).
The lawsuit was filed against Google by the U.S. Department of Justice last Tuesday, which claimed the company used anticompetitive and exclusionary practices in the search and advertising markets so as to keep its monopoly.
What is the agreement between Google and Apple?
Google signed an agreement with Apple so that it appears as the preselected search engine option on Apple's devices back in 2017. As per the NYT, Apple receives between eight and 12 billion dollars each year from Google to keep its top ranking as Apple devices' main search engine.
It's being claimed as the most money provided by Google to anyone, and it's roughly 14 to 21 percent of Apple's annual profit.
What the lawsuit claims, is that this deal is similar to illegal ones to keep Google as the default search engine, and thus gaining the monopoly in that sector. This makes it near impossible for any other, smaller search engine company to make a name for itself in the current market.
The US Department of Justice and 11 state attorneys-general today filed a long-anticipated competition case against Google.— The Times (@thetimes) October 20, 2020
The case could result in the break-up of the company, crippling fines and other sanctions https://t.co/PgczuSMasI
As per the Justice Department's statement, almost one half of Google's traffic derives from Apple devices. Losing this monumental amount of traffic from one place has been described as "code red" and "terrifying" within the company.
This current process is deemed invaluable to Google's business model due to its way of operating advertisements.
Apple isn't out of the woods, either, as it looks to be facilitating anticompetitive behavior by agreeing to the deal and accepting more money.
Ignoring the fact that at the surface level the two companies are arch-competitors, this deal seems to have worked well for both parties in what is being called "an unlikely union of rivals."
It's clear to see how this lawsuit could be detrimental not only to Google but to Apple as well. The NYT's report believes that if the lawsuit against Google wins, then Apple may have no choice than to create its own search engine, which would create an even bigger issue for Google.