Google did what it could to stifle Apple's search efforts, show court documents

AppleInsider

Court filings show that Google feared losing revenue to an Apple-made rival and did what it could to stop it by establishing limits on what it could do as a part of the company's deal to stay on iOS.

Google pays to be the default

Apple has played a key role in the Department of Justice's (DOJ) antitrust case against Google. While not a defendant, Apple executives were called as witnesses -- despite the company's objections -- and much of the case centers on the deal between Google and Apple.

That deal concerned Apple agreeing to have Google be the default search engine in iOS, and therefore on all iPhones. It's an agreement that has allegedly meant Google paying Apple as much as $20 billion annually.

According to The Information, Google executives became concerned in 2014 that Apple was directing users online without going through Google. Specifically, Safari was suggesting sites to users, which they could then go to directly.

"We are trying to build a structure that prevents them from diverting queries and destroying value," wrote Google executive Daniel Alegre, in an internal email from June 2016 email.

Reportedly, a slide deck revealed by the DOJ in court showed a forecast revenue hit from this feature. Then in 2016, when it was time to renew the deal, Apple agreed to keep its own search "substantially similar" to how it was then, rather than keep expanding the feature.

An August 2018 internal email appears to substantiate this. Joan Braddi, a Google executive in charge of search partnerships, wrote that the updated deal allowed Apple to offer "Siri suggestions," but in a specific, limited way.

Apple could do this, wrote Braddi, "exclusively for quality and not because they want to drive traffic to Siri."

Apple hasn't refused to make 'Apple Search'

The Information

posits that this agreement is why the so-called "Siri suggestions" feature of iOS has only been incrementally updated. And then despite Apple having acquired search technology startups, and then former Google search executive John Giannandrea in 2018.

Giannandrea was one of the Apple witnesses called to the trial, and his statements claimed that Siri suggestions have expanded.

"Our general approach is we think users of our devices are seeking answers," he said, "and so if we can provide the answer, we will do that rather than sending them off to a general search engine."

Giannandrea also stated that Apple has never agreed that it would not develop its own Google rival. However, also during the trial, Apple's Eddy Cue said that the company had not considered doing this, because Google's search is the best.

Apple has not commented. Judge Amit P. Mehta has also ruled that much or even most of the documentation presented at trial will not be made public because it contains business trade secrets.

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omasou

Apple's just biding their time. Once contracts expire and w/this case expediting their modification/termination; I'm willing to bet we'll see a Siri (aka ChatGPT style) search that will stop telling us to open Safari to see the results but they'll make sure it is fully baked so as not to repeat Map's introduction fiasco. Guessing browser base search was never in Apple's plans and that they have been happy to let Google fund their own demise.

Analyst keep saying Apple is behind or late to come up to speed in the AI race. As with everything they do, the technology (LLMs) weren't ready for prime time, yet.

I'm excited to see what they introduce and bet it works across MacOS, iOS, WatchOS and TvOS.

22july2013

Samsung competes with Apple in the phone business, but Apple pays Samsung billions for phone components.

Google competes with Apple in the phone business, but Google pays Apple billions for services used by their phones.

Neither case is inherently evil. I don't mind investigations. But I would recommend that if investigations come up really empty, the investigators and people who called for and funded it should be publicly shamed for wasting government money.

thrang

I kind of don't get it. Apple is not being strong-armed. If they prefer to take the 20bn to simply default to Google search (while allowing the user to easily change it), rather than spend capital to build their own from scratch, that's their prerogative. If Google withheld some other capability or service Apple needed unless they signed that deal, that would be coercive, but I haven't seen that argued.

Apple perhaps loses a high ground business ethics argument which is: they heavily promote privacy with the iPhone, but then take cash to leverage a company known to use as much of your personal data as they can.

mikethemartian

22july2013 said:

Samsung competes with Apple in the phone business, but Apple pays Samsung billions for phone components.

Google competes with Apple in the phone business, but Google pays Apple billions for services used by their phones.

Neither case is inherently evil. I don't mind investigations. But I would recommend that if investigations come up really empty, the investigators and people who called for and funded it should be publicly shamed for wasting government money.

The Sherman Act

Section 1:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.

Section 2:

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony.

22july2013

mikethemartian said:

22july2013 said:

Samsung competes with Apple in the phone business, but Apple pays Samsung billions for phone components.

Google competes with Apple in the phone business, but Google pays Apple billions for services used by their phones.

Neither case is inherently evil. I don't mind investigations. But I would recommend that if investigations come up really empty, the investigators and people who called for and funded it should be publicly shamed for wasting government money.

The Sherman Act

Section 1:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.

Section 2:

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony.

Do you care to connect the dots and try to explain how either clause of the Sherman act applies to either of the first two sentences of my post? I don't see any specific connection. That's probably what the investigation will attempt to uncover, and I said I don't mind these investigations. So I'm not sure if you are agreeing with me or trying to make some other point.

Apple, Google and Samsung are big companies, and they are allowed to pay each other billions for goods and services. The word "billions" doesn't imply monopoly. Don't you agree?

avon b7

thrang said:

I kind of don't get it. Apple is not being strong-armed. If they prefer to take the 20bn to simply default to Google search (while allowing the user to easily change it), rather than spend capital to build their own from scratch, that's their prerogative. If Google withheld some other capability or service Apple needed unless they signed that deal, that would be coercive, but I haven't seen that argued.

Apple perhaps loses a high ground business ethics argument which is: they heavily promote privacy with the iPhone, but then take cash to leverage a company known to use as much of your personal data as they can.

The dirty washing won't be washed in public but it looks like there is stuff to wash. 

Given current times, I think both companies might be feeling the ice cracking under their feet. 

I think whether it breaks or not will depend on what gets squeezed out of the process.

I take the view that it's almost as if Apple is being paid to not step on Google's grass with both companies understanding full well the impact on competition. 

danox

22july2013 said:

Samsung competes with Apple in the phone business, but Apple pays Samsung billions for phone components.

Google competes with Apple in the phone business, but Google pays Apple billions for services used by their phones.

Neither case is inherently evil. I don't mind investigations. But I would recommend that if investigations come up really empty, the investigators and people who called for and funded it should be publicly shamed for wasting government money.

Google pay Apple is worth the justice department probably is looking to eliminate….

22july2013

danox said:

22july2013 said:

Samsung competes with Apple in the phone business, but Apple pays Samsung billions for phone components.

Google competes with Apple in the phone business, but Google pays Apple billions for services used by their phones.

Neither case is inherently evil. I don't mind investigations. But I would recommend that if investigations come up really empty, the investigators and people who called for and funded it should be publicly shamed for wasting government money.

Google pay Apple is worth the justice department probably is looking to eliminate….

With all the politeness I can muster, I couldn't understand or parse any of that. I have a feeling you might be drunk, with all the errors in that statement. But I have to give you credit for correctly putting four periods at the end of your sentence - not many people know about that rule. That's impressive.

davidw

mikethemartian said:

22july2013 said:

Samsung competes with Apple in the phone business, but Apple pays Samsung billions for phone components.

Google competes with Apple in the phone business, but Google pays Apple billions for services used by their phones.

Neither case is inherently evil. I don't mind investigations. But I would recommend that if investigations come up really empty, the investigators and people who called for and funded it should be publicly shamed for wasting government money.

The Sherman Act

Section 1:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.

Section 2:

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony.

The "deal" between Google and Apple have nothing to do with Section 1 or Section 2 of the Sherman Act. Section 1 and 2 of the Sherman Act mainly deals with contracts made between parties that are normally competitors or rivals.  Since Apple do not compete with Google in the internet search engine market, any contract between them (regarding search engines) can not be construed as limiting trade or an attempt to monopolize. Just exactly what existing trade was restraint by Apple choosing not to develop a search engine? And just exactly how is this "deal" an attempt by Google and Apple to monopolize a market, when Apple have 0 percent of internet search engine market share?

It would be a violation of the Sherman Act if Google were to force Apple into making Google their default on Safari, by threatening to not provide Safari with a Google search engine. And since the "default" is like the slotting fee in retail, there is no violation of the Sherman Act if Apple were to sell that "default" position for a price. Just like how it's perfectly legal for retail to sell their prime shelf space for a premium. 

If Intel makes a deal to pay Dell millions of dollars in rebates, if they were to purchase so many Intel CPU's for the PC's they sell, there is no violation of Section 1 or 2 of the Sherman Act. Neither would there be if Dell chose not to spend the cost of RD to develop their own CPU, because using Intel CPU is much more profitable. One can't make the silly argument that Dell choosing not develop their own CPU is somehow limiting competition in the CPU market, just because Apple was able to developed their own CPU.  

If Intel threaten Dell to stop supplying them with CPU, if Dell were to also use AMD CPU, that is a violation of Section 1 of the Sherman Act. (This was what got Microsoft in anti-trust trouble by forcing third party PC makers to only sell PC's with Windows installed. There would be no issue if Microsoft sold PC's with only Windows installed.)

If the combine market share of Intel and AMD gave them monopoly power and they made a deal to sell CPU's at a fixed price to PC vendors, then that is a violation of Section 1 of the Sherman Act. This is the classic case of competitors making a deal to not compete with each other.

If the combined CPU market share of Intel and AMD gave them monopoly power and they made a deal to cut the price of their CPU below competitive prices, in order to force other competitors out of the market, then that would be a violation of Section 2. The contract would be seen as Intel and AMD (who are normally competitors) attempting to monopolize the CPU market. 

9secondkox2

Of course they did. Google bleeds money and is poorly managed outside of one thing in particular: search ads. The search engine in particular is phenomenal and shows just how much Google cares about people wanting to use it. Google in turn serves ads that earn them an incredible amount of revenue in addition to the benefits of public trading. 

An Apple search engine would hurt Google incredibly badly. The iPhone itself accounts for an insane amount of traffic to Google - in addition to iPad and Mac. Sure Google has the windows and android markets to glean from (yet even many pc users have iPhones). But nothing is as consistent as the apple user base. The pc crowd loves to switch things up and experiment. The apple crowd loves to find the absolute best thing that “just works” and stick with best in class stuff.  A search engine made by Apple would rival googles search engine in short order and would leave a crater in Google’s profits while amping up their own. 

In the end, not only is 20 billion a nice incentive for apple, but I think it saves apple from having to dive into a business it’s not sure it wants to be in. The iAd thing came and went and apple couldn’t find a way to satisfy advertisers without compromising their own v values. So they bowed out. 

As it is now, everyone wins. Apple makes an easy 20 billion, Google gets the default spot, and other search engines are easily selected.  

jdiamond

thrang said:

I kind of don't get it. Apple is not being strong-armed. If they prefer to take the 20bn to simply default to Google search (while allowing the user to easily change it), rather than spend capital to build their own from scratch, that's their prerogative. If Google withheld some other capability or service Apple needed unless they signed that deal, that would be coercive, but I haven't seen that argued.

Apple perhaps loses a high ground business ethics argument which is: they heavily promote privacy with the iPhone, but then take cash to leverage a company known to use as much of your personal data as they can.

Hi Thrang.  This isn't about protecting Apple in the slightest.  It's just about preventing companies from doing deals that limit user choice under the assumption that choice = competition, which is better for consumers.  What if Apple could make new and amazing contributions to search that users would love?  Well, Google is bribing them not to.  There's always a business argument - Apple can use that bribe to bring other cool and exciting things to users.  But if this were the norm, then companies could just pay each other to not compete - each company has one product that's the only one.

The evidence of the arrangement actually points to the idea that Apple could have had a competitive search product.  As a comparison, Apple used to pay Microsoft to keep support Office for Mac - because Apple didn't have something as good.  If they had, Microsoft might have paid Apple to allow Office on the Mac.

9secondkox2

mikethemartian said:

22july2013 said:

Samsung competes with Apple in the phone business, but Apple pays Samsung billions for phone components.

Google competes with Apple in the phone business, but Google pays Apple billions for services used by their phones.

Neither case is inherently evil. I don't mind investigations. But I would recommend that if investigations come up really empty, the investigators and people who called for and funded it should be publicly shamed for wasting government money.

The Sherman Act

Section 1:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.

Section 2:

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony.

Looks like this doesn’t apply at all, considering neither has a monopoly on anything and apple provides free alternatives. No conspiracy. Just one paying tribute be at default - not unlike advertisers paying to show up first in a search engine or Sony paying for a more prominent shelf space in a retail store. 

The point of the act is to prevent an intent to monopolize. Neither party has show. Such intent. Intent to grow, not stagnate, and succeed, yes. Monopolize, no. Working hard and making business deals to an end ve continued success does not equate to intent to monopolize. 

Any view that takes the position of making a business deal for an easily changed default setting or more prominently visible placing is an overarching view that must be applied to any and all businesses where money is exchanged more more favorable viewing position, be that shelf space, physical building location in relation to traffic direction related to city streets. Advertisements or search engine result placement, website ads (header banner vs sidebar vs mid copy vs footer placement), etc. it’s not a violation of anything but rather the same way here nest business has been done since forever. Just because these are two giant businesses that have already a hei Ed enormous success doesn’t mean they aren’t allowed to a beige an enormous amount more. In fact, they should be commended as examples of how to keep growing and succeeding after reaching milestone after milestone. Once you take your foot of the gas, no matter how far ahead you are, that’s when your competitors pass you by. Happens all the time. Microsoft, Nokia, yahoo, Ericsson, etc. etc. neither Apple nor Google have stopped pushing the pedal to the metal. This business deal shows that and nothing more.