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The U.S Federal Trade Commission’s year-long antitrust probe of online search giant Google has now officially brought Apple into the fray by subpoenaing the Cupertino company seeking information on the agreement that made Google the default search engine on iOS devices, Bloomberg reported.
Information provided to Bloomberg by two unnamed individuals familiar with the matter said that the FTC is interested in how Google pursued agreements with Apple and other handset companies to make the Mountain View company’s search engine the default choice for end users. T
his could reveal whether Google abused its power in online search to give it an unfair advantage in the increasingly important and lucrative mobile search industry.
Google rivals, including Microsoft—which finds itself in a role reversal from a decade earlier—have pressured the FTC to investigate the company, arguing that Google’s method of obtaining default status on so many devices is anticompetitive.
The advantage Google has via its default status on many devices is substantial, according to Macquarie Capital analyst Ben Schachter, as consumers usually leave the default settings in place on their phones and tablets.
“Most people don’t even know what default search means — they just know there’s a box they can use to look for information,” Mr. Schacter said.
While Apple has been slowly removing Google services, such as maps, from its products recently, the Google search engine has been the default on all iOS devices dating back to the original iPhone’s launch in 2007. This arrangement gave Google $1.3 billion in search revenue from iOS devices last year, although the company had to pay Apple $1 billion for the privilege, resulting in a $335 million profit on the deal. UPDATE: The previous information on Google’s financial relationship with Apple, while reported by Bloomberg, has been brought into question and is merely an estimate by a market analyst. While Google paid $1.5 billion total to secure exclusivity agreements last year, it is unknown exactly how much was paid to Apple.
Now a year into the investigation of Google’s business practices, today’s news indicates that the FTC is likely intensifying its scrutiny of the search and advertising giant and that this story won’t find an ending any time soon.