As Part of a Mysterious Non-Compete Agreement, Google Reportedly Pays Apple a Portion of the Revenue Generated by Chrome Search

According to The Register, Google allegedly pays Apple a percentage of all search revenue from Chrome for iOS in what appears to be a non-compete agreement.

According to a source familiar with the situation who spoke to The Register, Google has been paying Apple a percentage of search revenue generated by Chrome users on iOS in exchange for being the default search provider in Safari and other commercial advantages. The relationship between Apple and Google is under investigation by the United States Justice Department and the United Kingdom’s Competition and Markets Authority (CMA), which are looking into the secretive search revenue-sharing agreement.

Google pays Apple approximately $15 billion per year to ensure that Google’s search engine is the default option on Apple devices. Nonetheless, the recent revelation that Google is allegedly paying Apple for searches in Chrome for iOS as part of a search revenue-sharing agreement is a novel development. Only a few people are said to be aware of the revenue-sharing agreement in its entirety. The amount Google is paying Apple and the overall terms of the agreement have been redacted from CMA reports.

Apple must benefit users who want to use Google Search within Google Chrome for iOS. As a result, the CMA is concerned that the payments are intended to discourage Apple from competing with Google’s search engine, which would seriously harm Google’s business model.

The agreement was first mentioned publicly in a December 27, 2021, antitrust lawsuit filed in San Francisco. According to an amended PDF from March 2022 related to the lawsuit, Apple has been paid for the profits it would have made if it had competed with Google, minus the challenges and costs of doing so:

20. Because Apple devices accounted for more than half of Google’s search business, Apple was a major potential threat to Google, which Google labeled as “Code Red.”
21. To eliminate the threat and fear of Apple as a competitor, Google paid billions of dollars and agreed to share profits with Apple.
22. Google viewed Apple as a potential competitor to “Code Red.”
23. If Apple had entered the search market, Google would have lost half of its business.

Apple and Google requested that the case be dismissed due to a lack of evidence of a horizontal agreement between the two companies. Nonetheless, the CMA’s investigation indicates that such an agreement exists.

According to The Register, this could explain why Apple has been hesitant to launch a competing search engine or develop Safari to the point where it can compete with Chrome on macOS. Similarly, Google would be disinclined to press Apple to allow a non-WebKit version of Chrome for iOS.

As a result, Apple and Google see significant benefits in maintaining each other’s dominance. This market segmentation is considered “per se illegal” under US antitrust laws. As more information becomes available, it is likely to come under fire.