Google and Apple have attracted as much interest from investors as from regulators. They are as frequently praised for their innovations as they are criticized over claims that they have squeezed competitors from the market. Still, every move these two companies make has consequences for other businesses and for consumers.
In December, the California Crane School sued Google and Apple, together with their top executives, for allegedly violating antitrust laws. The plaintiff argues that the two companies agreed “that Apple would not compete in the search business in competition with Google” and “in exchange for Apple’s commitment not to compete in the search business in competition with Google, Google agreed to share its profits from the search business with Apple and, in addition, to Apple extra billions of dollars.”
This arrangement has been in place for years and both companies have benefited immensely from it. Google receives around half of its search traffic from Apple devices and Apple received, according to the plaintiff in the court file, around $15 billion in 2020 — but some analysts estimate this figure could go up to $20 billion in 2022 in exchange for Google powering Safari on mobile devices. Yet, this is hardly a secret agreement, as the companies haven’t denied that it is a mutually beneficial arrangement.
From an antitrust point of view, the lawsuit will need to answer many questions. Are the two companies competing in the same market? If not, could they have competed had this agreement never existed? Is this a division of the market? The answers to these questions will determine whether this agreement has been the most obvious violation of antitrust laws in plain sight, or it is just too good a business opportunity to let it go.
But this frenemy relationship between these two giants also puts the spotlight on how difficult it will be to regulate these complex ecosystems. Regulators have focused, so far, on identifying individual practices where the companies may abuse their dominant positions. European Union regulators have launched enforcement actions and imposed more than $10 billion in fines on Google alone and opened four antitrust probes against Apple.
Even after efforts to change Google’s practices in the EU, the share of search they drive there remains relatively unchanged.
Additionally, the EU is in the process of passing new legislation that will determine what the internet companies can or can’t do. However, most of these measures address, for instance, how Google or Amazon can’t favor their own products in their platforms, or how Apple shouldn´t impose unnecessary restrictions on app developers, but there is little, or nothing, about the interactions between these giants. Obviously, there is no need to say that anticompetitive agreements are forbidden, but any collaboration between these ever-growing ecosystems may increasingly be subject to regulatory scrutiny.
See also: German Antitrust Watchdog Takes New Step To Regulate Google
Today it is an agreement on search engines in mobile devices, but tomorrow Google may team up with Apple and Amazon to provide connected in-vehicle experiences in cars. Smart TVs, wearables, internet of things, virtual assistants, all these areas may see new frenemy relationships. The benefits for consumers may be obvious, but so too is the harm to other companies trying to enter in this space. With the different sectors of the connected economy more and more entrenched, and a possible interest from internet giants to penetrate in every sector of the digital economy, it will be difficult to craft regulations that balance the interests of all stakeholders involved. The future complexity here is also who competes with whom and in what markets. Many consumers start their search for products on Amazon, or specialty marketplaces. Facebook/Meta is formidable to Google for online advertising, and Amazon and Apple both, are building out their own ad networks within their ecosystems as well.
In 2022, U.S. policymakers may attempt to design new laws to limit the quasi-monopoly power of these companies and to add additional scrutiny to possible acquisitions. Before writing policy, it seems prudent to carefully assess how all these moving pieces may affect more companies than the ones in everybody’s minds — Google, Apple, Meta, Amazon and Microsoft — and what the potential impact could be on the consumers who like and use their services today.
See also: Congress Wants Biden to Get in the Game and Play Bigger Role in Regulating Big Tech
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