The US Justice Department is investigating a multibillion-dollar deal between Apple and Google, which sees Google paying upwards of between $8-12 billion per year to have its search engine be the preselected option on iOS and other Apple devices.
The deal was reportedly formed back in 2017, and the US Justice Department has now targeted the deal on the heels of antitrust practices between the two companies, according to the Wall Street Journal. The case between the two companies marks the biggest antitrust case the US government has tackled in the last two decades.
Apple and Google’s brokered deal is effectively the largest payment Google makes to any single company. The sum amount that Google pays Apple attributes to a reported 14-21 percent of Apple’s annual profits. From Google’s perspective, the money pays for close to half of its search engine traffic as nearly 50 percent stems from Apple devices.
According to the US Justice Department filings, if Google were to lose its default status on iPhone, through Siri, and other Apple devices, Google would be facing a “Code Red” scenario. The antitrust case proves to be quite a danger for Google. The company also fears that without the deal in place, Apple may make it harder for users to navigate Google’s search engine or use Google’s other services such as YouTube, Maps, etc.
Apple and Google have been facing scrutiny over antitrust in the recent past. Prosecutors now claim that the anticompetitive behaviour between the two companies is leveraging illegal tactics to assist in Google’s monopoly and keep competition from being boosted.
Currently, Apple has no means of its own search engine. However, a possible intervention may see to it that Apple develops its own search engine, thus rivalling its former partner. Alternatively, Apple may look to acquire its own search engine in replacement of Google’s if the US Justice Department’s antitrust lawsuit applies pressure.