A Landmark Class Action: Apple and Google Under Scrutiny
A British Columbia Supreme Court judge has recently certified a class action lawsuit against Apple over allegations that its search agreement with Google stifled competition and inflated advertising prices. This development marks a significant moment in the ongoing scrutiny of tech giants’ business practices.
A Bit of Background
In recent years, the agreement between Apple and Alphabet to make Google the default search engine on Safari has garnered attention from regulators across the globe, including the US, UK, and Australia. Concerns regarding search competition have also emerged in the EU and Japan, highlighting the global impact of these tech giants’ business strategies.
Each investigation into these practices has raised questions about Google’s dominance in search and how its agreements with other companies might limit competition. This issue gained further traction during the US Department of Justice’s antitrust case against Google, where Apple executives, including Eddy Cue and John Giannandrea, provided testimony. Giannandrea, who joined Apple from Google in 2018, led its AI efforts before stepping down earlier this year.
The US case resulted in a federal judge ruling in August 2024 that Google had illegally maintained its monopoly in online search through anticompetitive agreements, including its deal with Apple. This ruling has now influenced a class action against Apple in Canada, which a British Columbia Supreme Court judge has certified.
Canadian Class Action Certified
The lawsuit was initially brought in 2021 by Spark Event Rentals Ltd., an event rental company based in British Columbia. The plaintiff alleged that Apple and Google conspired to limit competition in the search market, allowing Google to charge advertisers artificially inflated prices.
Apple contended that its agreement with Google was a legitimate distribution arrangement rather than an unlawful conspiracy. The company argued that Google was the appropriate defendant, describing itself as an “innocent bystander.”
Interestingly, the lawsuit originally named both Apple and Google as defendants, but the plaintiff eventually dropped Google from the case following a dispute over an arbitration clause in its advertising contracts.
With Apple now the sole defendant, Justice Thomas has permitted the case to proceed as a class action, highlighting sufficient grounds to examine whether Google’s payments discouraged Apple from developing its own search engine.
The lawsuit seeks financial compensation for advertisers who allegedly overpaid for Google search ads, with the court allowing the question of punitive damages to proceed. The class action covers Canadian residents who purchased search ads from Google since 2005, when Apple and Google first agreed to make Google the default search engine on Safari in exchange for a share of advertising revenue.
Importantly, the ruling does not establish that Apple engaged in anticompetitive conduct but merely allows the allegations to proceed as a class action. The decision raises a central proposition: Apple could have used its resources to enter the search engine market but chose not to because Google paid Apple billions in revenue-share payments to make Google the default search provider on Apple products.
Justice Thomas cites testimony from Giannandrea and quotes Cue’s testimony from the US antitrust trial. He concludes that “this provides some basis in fact, supporting the inference that Apple did not compete with Google in the search engine market because of its Agreement with Google.”
While the judge acknowledges Apple’s objections to the evidence, he notes that “the plaintiff has cherry-picked evidence to support his case,” but believes “it is appropriate to do so at this stage in the proceedings.” With the class action now greenlit, the case will move forward toward trial, though a date has not been announced yet.
For more details, you can read the full decision Here.
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