Lawsuit claims Google paid Apple to stay out of search

Apple already has a search engine. A lawsuit now claims Google has paid Apple to keep the company from making its own search service.

Class action filed

I think most Apple watchers know that Google pays Apple a substantial fee to ensure its search engine is the default on Apple devices.

Now a class action lawsuit filed in California claims these fees are part of a non-compete agreement, under which Google pays Apple a slice of its profit in exchange for no Apple search engine.

The claim is that the deal served to limit competition and to inflate ads rates. It requests an injunction to prevent the deal, and requests their businesses are broken up.

It also claims the decision to work in this way was reached between Apple’s Steve Jobs and Eric Schmidt, then Google CEO. I have no idea if any of this is true, and I guess the courts will decide.

What we know

It’s difficult to tell the line. After all, Apple does not dominate in search, mobile or PC sales. We know that Google holds 87.57% of the US search market. Apple holds c.<50% of the U.S. mobile market and under ten percent of the computer market.

[Also read: DuckDuckGo will launch a seriously private browser for Macs]

Google, of course, dominates the U.S. mobile market with its Android operating system which is installed across devices from multiple vendors. PC users installing the still dominant Windows OS will find Bing installed as the default search engine.

In other words, Apple is not dominant, though we also know that its users tend to be more active online. Google, however, does dominate its market.

The extensive set of legal documents makes numerous additional claims, and in many instances leans on a comment Eric Schmidt made during Apple’s famous iPhone introduction in 2007.

“If we just sort of merged the companies we could call it AppleGoo,” said Schmidt at that time (see video above).

What was also interesting about that quip was Schmidt adding that he was “not a marketing guy”, in what could be seen as a soft barb aimed at the Apple leader.

Schmidt also discussed how the companies could merge without merging – before promptly introducing Android, falling out with Jobs, and causing the latter’s famed accusation that Google’s OS was “a stolen product” the visionary leader pledged to destroy.

The latter doesn’t appear to be part of the historical account provided within the litigation, but may have some bearing on results.

One more thing

What will be interesting, assuming the case proceeds, is what it may reveal concerning the background relationships between the two firms.

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