UK regulators are looking at a long-standing agreement between Apple and Google on the default search engine in the iPhone maker’s mobile Safari browser, reports Reuters.
According to an updated report compiled by the UK Government’s Competition and Markets Authority, Google pays Apple a “substantial majority” of the £ 1.2bn (roughly $ 1.5bn) it pays each year in the UK alone Linked by so-called predetermined positions, in other words when Google pays a company to make its search engine the most suitable one on a browser or other platform.
The report says the deal creates a “significant barrier to entry and expansion” for Google’s competitors. The report also suggests limiting Apple’s ability to monetize such deals or give users a search engine option in settings.
For years, Mobile Safari has been based on Google search, making the iPhone a substantial revenue generator for Google’s mobile advertising business and giving Google a competitive advantage over the competition. In 2014, court documents revealed a $ 1 billion payment Google made to secure the default position on Mobile Safari in the US Analysts estimate that amount has only increased in subsequent years. Apple benefits enormously from this, with an estimated $ 9 billion a year from such placement agreements, although the company has never disclosed concrete figures.
Regulators are now concerned that this massive deal with the United Kingdom, which was 50 percent higher last year than Google paid for placement in the United States more than six years ago for a much more populous region, may stifle competition. Google’s competitors, though few, like Microsoft’s Bing and DuckDuckGo, actually remain, may not be in a position to pay such a large sum for the prime location in the iPhone’s default browser. Here’s the excerpt from the report, found on page 13, about the settlement:
In search, Google has negotiated agreements with Apple and with many of the largest mobile phone manufacturers under which it pays a portion of search advertising revenue to these partners in exchange for Google Search occupying the default search positions on the device. The scale of these payments is striking and demonstrates the value that Google places on these predetermined positions. In 2019, Google paid around £ 1.2bn in exchange for predetermined positions in the UK alone, most of which were paid to Apple for being the default in the Safari browser. Rival Google search engines we spoke with highlighted these default payments as one of the most important factors inhibiting competition in the search market. Consumers primarily access the Internet through mobile devices, which account for more than two-thirds of general searches, a share that has grown substantially in recent years and is likely to continue to grow in the future.
Regulators, both in the EU and the US, increasingly look to Big Tech over concerns that the size and power of Silicon Valley companies make them anti-competitive, though the EU has been much more aggressive in regards to enforcing such rules and applying fines. The EU has awarded Google numerous multi-million dollar fines in the past decade, and regulators are now investigating Apple for its management of the App Store and the fees it charges developers.
