Google Paid Apple Billions To Dominate Search On iPhones, Justice Department Says An agreement worth up to $12 billion made Google the de facto choice for online search on millions of iPhones. Justice officials say the deal may be anticompetitive under U.S. law.

Google Paid Apple Billions To Dominate Search On iPhones, Justice Department Says

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We're going to zoom in now on a detail in the lawsuit the Justice Department filed against Google this week. It alleges that Google paid Apple as much as $12 billion to be the default search engine for iPhones. Prosecutors say this proves that Google abused monopoly power to try to keep rivals down. We should mention Apple and Google are both financial supporters of NPR.

NPR's Bobby Allyn covers tech and joins us now. Bobby, thanks so much for being with us.

BOBBY ALLYN, BYLINE: You got it, Scott.

SIMON: And why does the government contend that this payment is evidence Google abused power?

ALLYN: So the heart of the government's case against Google is that it's grown so large it functions like a monopoly, like an oil baron or like a steel magnet. But instead of being an industrialist, it has huge power over the Internet, which, on its face, is not illegal. But when a company gains this much power and throws its weight around to make sure nobody else can compete, that's when there are real legal questions. And the Justice Department says that's how Google behaves. One really vivid example of this, at least allegedly, is this $12 billion payment. Google paid that to Apple to make sure Google would be the predetermined search engine on every single Apple device.

SIMON: Practical effect, as you note, is every time somebody buys an iPhone or an iPad and they search for something on the Internet, it's a Google search. Some people might consider that good. Why is it a problem?

ALLYN: In short, because if you're a search competitor, say Bing or DuckDuckGo or you pick one, you don't get any attention. I mean, how often, Scott, are you Googling things on your phone, right? (Laughter) I mean...

SIMON: That's how we say it.

ALLYN: Right. Exactly. So their dominance is baked into the verb. So - and the Justice Department points this out. And inside Google, becoming the default search engine was a huge priority. The Justice Department says Google insiders called the prospect of not getting the deal code red. Google CEO Sundar Pichai met one-on-one with Apple's Tim Cook to hammer out the terms of the deal behind closed doors. And according to the court papers, an unidentified senior employee from Google wrote to an Apple counterpart, quote, "our vision is to work as if we are one company." And so I called up former Justice Department antitrust lawyer John Newman and asked, is this collusion?

JOHN NEWMAN: I would say it's somewhere in the middle. It's not classic collusion.

ALLYN: So it's not like two oil companies conspiring to raise the price of oil, for instance.

NEWMAN: It looks more like one monopolist agreeing with another company to split the monopoly rent.

SIMON: So we have Google and Apple, who are technically competitors, working together to make each other stronger. What do the companies say about it?

ALLYN: The companies say there's nothing strange or illegal about it, that companies make deals all the time to get the best distribution for their products. And Apple just decided that Google simply was the best partner to work with. And Google says, look; people like Google, right? Its dominance and strength is the result of just how great it is. And former Justice Department lawyer Newman says, yeah, You can be the best, but that is not an argument to not give others a fair shot.

NEWMAN: If it is true that Google will win out on a competitive playing field - and it may be, even in a competitive market, a lot of people would like to use Google. But even if that's true, that's not a reason to leave the competitive playing field uneven.

SIMON: Bobby, where's the case go from here?

ALLYN: Yeah. So, Scott, it's going to drag on for many years. The big question on everyone's mind is, will Google be broken up? Plenty of calls on Capitol Hill for that to happen, but it's just too early to say whether a judge is going to buy the Justice Department's case, and if a judge does, what exactly will be done about it.

But I've talked to many antitrust experts. And they all tell me if the DOJ does persuade a judge, one outcome could be that, you know, when you buy an iPhone, you'll be given an option of what should be your default search engine. It might not automatically go to Google. This is what happens when you buy a smartphone in Europe, for instance. But in Europe, most people still choose Google.

SIMON: Well, we'll certainly be following this case - sounds like for years. Thanks very much for your reporting, Bobby.

ALLYN: You've got it. Thanks, Scott.


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