Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 1 of 28
`
`
`
`Joseph M. Alioto (SBN 42680)
`Tatiana V. Wallace, Esq. (SBN 233939)
`Angelina Alioto-Grace (SBN 206899)
`ALIOTO LAW FIRM
`One Sansome Street, 35th Floor
`San Francisco, CA 94104
`Telephone: (415) 434-8900
`Email: jmalioto@aliotolaw.com
`
`Lawrence G. Papale (SBN 67068)
`LAW OFFICES OF LAWRENCE G. PAPALE
`1308 Main Street, Suite 117
`St. Helena, CA 94574
`Telephone: (707) 963-1704
`Email: lgpapale@papalelaw.com
`
`[Additional Counsel Listed on Last Page]
`
`CALIFORNIA CRANE SCHOOL, INC.,
`on behalf of itself and all others similarly
`situated,
`
`Plaintiff,
`
`vs.
`GOOGLE LLC, ALPHABET, INC., XXVI
`HOLDINGS, INC., APPLE, INC., TIM
`COOK, SUNDAR PICHAI, and ERIC
`SCHMIDT,
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`
`
` Case No:
`COMPLAINT FOR VIOLATIONS OF
`SECTIONS 1 AND 2 OF THE SHERMAN
`ANTITRUST ACT (15 U.S.C. §§ 1 AND 2)
`CLASS ACTION
`DEMAND FOR JURY TRIAL
`
`
`
`
`
`
`
`Defendants.
`
`
`
`
`
`
`
`
`1.
`
`This is a private antitrust suit brought under Sections 4 and 16 of the Clayton
`
`Antitrust Act (15 U.S.C. 15, 26) for actual and potential damages and injunctive relief caused
`
`by reason of and made necessary by the Defendants’ past, present and substantially
`
`
`
`
`- 1 -
`Class Action Complaint for Violation of the Sherman Act
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 2 of 28
`
`threatening continuation of violations of Sections 1 and 2 of the Sherman Antitrust Act (15
`
`U.S.C. 1, 2).
`
`
`
`2.
`
`The Defendants Apple and Google agreed that Apple would not compete in the
`
`search business in competition with Google.
`
`
`
`3.
`
`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 pay Apple extra billions of dollars.
`
`
`
`4.
`
`Apple agreed to assist Google in building its search business for their mutual
`
`benefit.
`
`
`
`5.
`
`For Google to be able to generate sufficient billions of dollars to pay to Apple,
`
`Apple agreed that Google would be the only search engine automatically included in all of
`
`Apple’s devices.
`
`
`
`6.
`
`Apple’s agreement to include Google as the initial search engine on all of
`
`Apple’s devices gives Google a substantial and unfair anticompetitive advantage over other
`
`search providers, actual and potential, including Yahoo!, DuckDuckGo, Bing, and others.
`
`
`
`7.
`
`Apple and Google agreed to suppress, eliminate, and/or foreclose other search
`
`providers and/or potential search providers, and non-Google favored advertisers.
`
`
`
`8.
`
`These agreements were formed, confirmed, reconfirmed, and negotiated from
`
`time to time in private, secret, and clandestine personal meetings between the Chief Executive
`
`Officers and Chairmen of Apple and Google.
`
`
`
`9.
`
`The architects of the combination during the early 2000’s were Steve Jobs, the
`
`CEO and Chairman of Apple, and Eric Schmidt, the CEO and Chairman of Google.
`
`
`
`
`- 2 -
`Class Action Complaint for Violation of the Sherman Act
`
`
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 3 of 28
`
`
`
`
`
`10. More recently, the continued combination to eliminate competition between
`
`Apple and Google for the search business has been re-affirmed by Tim Cook, the CEO of
`
`Apple, and Sundar Pichai, CEO and Chairman of Google.
`
`
`
`11.
`
`The meetings between the CEOs and Chairmen of Apple and Google were
`
`clandestine to fraudulently conceal the agreement not to compete in the search business.
`
`
`
`12.
`
`The Plaintiffs do not know when the agreement was originally formed but
`
`allege that it began with Messrs. Jobs and Schmidt and that it has continued in force under
`
`Messrs. Cook and Pichai.
`
`
`
`13.
`
`Some of the secret meetings have been photographed and taped by bystanders
`
`who chanced to notice the conspirators meeting together.
`
`
`
`14.
`
`These meetings were undertaken to promote the shared vision that Apple and
`
`Google would act in effect as one company that was merged without merging. Apple and
`
`Google invented the word “co-opetitive” to describe their unlawful combination and
`
`conspiracy.
`
`
`
`15.
`
`These CEOs and Chairmen knew and understood that their agreements were
`
`illegal under the Antitrust Laws of the United States. The CEOs and Chairmen had been
`
`advised that their agreement to divide the market would violate the antitrust laws.
`
`
`
`16.
`
`Notwithstanding the advice of their counsel, the CEOs and Chairmen of Apple
`
`and Google insisted on going forward with the agreement in contumacious disregard of the
`
`law, thereby waiving any privilege that otherwise would attach to communications with their
`
`counsel.
`
`
`
`17.
`
`The overall purpose of the Defendants’ agreement was to eliminate the
`
`potential competition of Apple entering the search business.
`
`
`
`
`- 3 -
`Class Action Complaint for Violation of the Sherman Act
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 4 of 28
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`
`
`
`18.
`
`In furtherance of the unlawful agreement, the Defendants engaged in the
`
`following acts and means, among others, to ensure the success of the agreement:
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`a.
`
`b.
`
`c.
`
`d.
`
`secret meetings between the CEOs;
`
`profit-pooling;
`
`payment of billions of dollars every year by Google to Apple;
`
`automatic inclusion of Google search on Apple devices, to the exclusion
`
`of other search companies, and non-Google favored advertisers;
`
`
`
`
`
`
`
`
`
`e.
`
`f.
`
`Apple made; and
`
`agreement that Apple would not compete;
`
` the recognition and agreement that the more Google made the more
`
`
`
`
`
`
`
`g.
`
`elimination of Apple as a potential competitor in the search business.
`
`19. More than half (50%) of Google’s search business was conducted through use
`
`of Apple devices.
`
`
`
`20.
`
`Because more than half of Google’s search business was conducted through
`
`Apple devices, Apple was a major potential threat to Google, and that threat was designated
`
`by Google as “Code Red.”
`
`
`
`21.
`
`Google paid billions of dollars to Apple and agreed to share its profits with
`
`Apple to eliminate the threat and fear of Apple as a competitor.
`
`
`
`22.
`
`Google viewed the aspect of Apple as a potential competitor to be “Code
`
`Red.”
`
`
`
`23.
`
`If Apple became a competitor in the search business, Google would have lost
`
`half of its business.
`
`
`
`24.
`
`Google, as of September 2020, controlled 94% of the mobile search engine
`
`U.S. market share.
`
`
`
`
`- 4 -
`Class Action Complaint for Violation of the Sherman Act
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 5 of 28
`
`
`
`25.
`
`Google, as of September 2020, controlled 82% of computer search engine U.S.
`
`market share.
`
`
`
`26.
`
`For the last 10 years, from 2009 to 2019, Google increased its control of the
`
`search engine U.S. market share from 80% to 88%.
`
`
`
`27.
`
`Google charges higher prices to advertisers than would otherwise be the case in
`
`the absence of the Google-Apple agreement.
`
`
`
`28.
`
`By reason of the agreement between Apple and Google, the prices, the
`
`production, the innovation, and the quality of the search business has been substantially,
`
`adversely, and anticompetitively affected.
`
`
`
`29.
`
`In addition to the potential and actual damages suffered by reason of the
`
`conspiracy, the Plaintiff and the class also charge under Section 16 of the Clayton Act that the
`
`illegal payments by Google to Apple and the illegal profit sharing, and all payments by
`
`Google to Apple in furtherance of the agreement, must be disgorged under principles of equity
`
`on the grounds that these wrongdoers cannot be allowed or permitted to profit from their own
`
`wrongdoing.
`
`
`
`30.
`
`Because of the fraudulent nature of the clandestine meetings of these CEOs and
`
`Chairmen of Apple and Google, and because of the secrecy of their agreements, the exact
`
`amounts and times of the payments, rebates, and profit sharing that Google made to Apple are
`
`alleged on information and belief.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`31.
`
`32.
`
`33.
`
`34.
`
`35.
`
`In any one year, Google paid Apple more than $1 billion.
`
`In any one year, Google paid Apple more than $3 billion.
`
`In any one year, Google paid Apple more than $6 billion.
`
`In any one year, Google paid Apple more than $9 billion.
`
`In any one year, Google paid Apple more than $10 billion.
`
`- 5 -
`Class Action Complaint for Violation of the Sherman Act
`
`
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 6 of 28
`
`
`
`
`
`
`
`
`
`
`
`36.
`
`37.
`
`38.
`
`39.
`
`In any one year, Google paid Apple more than $12 billion.
`
`In any one year, Google paid Apple more than $12 billion.
`
`In any one year, Google paid Apple more than $15 billion.
`
`From 2005 up to and including the time of the filing of this complaint, Google
`
`paid Apple more than $50 billion not to compete in the search business.
`
`Google paid Apple to stay out of the search business.
`
`Apple accepted the payments from Google and stayed out of the search
`
`
`
`
`
`40.
`
`41.
`
`business.
`
`
`
`42.
`
`Apple promoted Google in the search business as against other search providers
`
`and non-favored advertisers.
`
`
`
`43.
`
` Apple and Google have the motive, the opportunity by their meetings, and the
`
`ability to control the search business, to share in the profits, and to eliminate the potential
`
`competition of Apple.
`
`
`
`44.
`
`This Court has subject matter jurisdiction of the federal antitrust claims
`
`asserted in this action under 15 U.S.C. §§ 15 and 26, and 28 U.S.C. §§ 1331 and 1337.
`
`
`
`45.
`
`Plaintiff and the putative class have paid more to Defendant Google to place
`
`the Plaintiffs’ ads on Google’s search than they would have paid in a competitive market
`
`within the United States, especially if Apple had entered the search business and competed
`
`with Google.
`
`
`
`
`
`46.
`
`The Court has personal jurisdiction over the Defendants because all Defendants
`
`are domiciled and are found within the United States, and venue is proper in this District under
`
`15 U.S.C. § 22, and under 28 U.S.C. § 1391. Defendants transact business and are found
`
`within this District.
`
`
`
`
`- 6 -
`Class Action Complaint for Violation of the Sherman Act
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 7 of 28
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`
`
`
`47.
`
`Defendants Google and Apple have engaged in, and their activities have
`
`affected substantially the interstate and foreign trade and commerce of the United States.
`
`Google and Apple provide a range of products and services that are intentionally marketed,
`
`distributed, sold, and offered to consumers throughout the fifty states and across state lines
`
`and in foreign countries. The restraints alleged in this Complaint affect and are a burden on
`
`the free and open trade between and among the States of the United States and the trade and
`
`commerce between and among the United States and foreign nations.
`
`
`
`48.
`
`Plaintiff, CALIFORNIA CRANE SCHOOL, INC., is a corporation organized
`
`under the laws of the state of California. Plaintiff has directly paid Google for the placement
`
`of advertising on Google search. Plaintiff has for many years paid rates for advertising on
`
`Google that have been inflated by the Defendants’ conspiracy.
`
`
`
`49.
`
`Defendant Google, LLC is a limited liability company organized and existing
`
`under the laws of the State of Delaware. It is headquartered in Mountain View, California.
`
`Google is a subsidiary of Defendant XXVI Holdings Inc., which is a subsidiary of Defendant
`
`Alphabet Inc. Defendant Alphabet Inc. is a publicly traded company that is incorporated and
`
`existing under the laws of the State of Delaware. Its principal executive offices are in
`
`Mountain View, California. (Unless separately noted, Defendants Google, XXVI Holdings
`
`Inc. and Alphabet will hereinafter and above be collectively referred to as “Google”.)
`
`
`
`50.
`
`Defendant Apple, Inc. (hereinafter and above referred to as “Apple”) is a
`
`corporation organized and existing under the laws of the State of Delaware. It is
`
`headquartered in Cupertino, California.
`
`
`
`51.
`
`Defendant Tim Cook is the current CEO of Apple, Inc. Defendant Cook
`
`personally negotiated the contracts, combinations, and conspiracies alleged in this Complaint,
`
`and continuously confirmed, re-confirmed, and amended those agreements at secret meetings
`
`
`
`
`- 7 -
`Class Action Complaint for Violation of the Sherman Act
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 8 of 28
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`
`with his counterpart Defendant Pichai of Google. Defendant Cook’s acts were authorized and
`
`ratified by Apple, and Defendant Cook was paid bonuses for the anticompetitive success of
`
`the agreements with Google. The board of directors of both Google and Apple knew of these
`
`agreements and understood their purpose, intent and motive, and approved and ratified them.
`
`
`
`52.
`
`Defendant Sundar Pichai is the current CEO of Defendant Alphabet Inc. and of
`
`Defendant Google LLC. Defendant Pichai personally negotiated the contracts, combinations,
`
`and conspiracies alleged in this Complaint, and continuously confirmed, re-confirmed, and
`
`amended those agreements at secret meetings with his counterpart Defendant Cook of Apple.
`
`Defendant Pichai’s acts were authorized and ratified by Google, and Defendant Pichai was
`
`paid bonuses for the anticompetitive success of the agreements with Apple. The board of
`
`directors of both companies knew of these agreements and understood their purpose, intent
`
`and motive, and approved and ratified them.
`
`
`
`53.
`
`Defendant Eric Schmidt is the former CEO and Chairman of Google.
`
`Defendant Schmidt personally negotiated the contracts, combinations, and conspiracies
`
`alleged in this Complaint, and continuously confirmed, re-confirmed, and amended those
`
`agreements at secret meetings with his counterparts Steve Jobs and Defendant Cook of Apple.
`
`Defendant Schmidt’s acts were authorized and ratified by Google, and Defendant Schmidt was
`
`paid bonuses for the anticompetitive success of the agreements with Apple. Defendant
`
`Schmidt served on the Board of Directors of both Google and Apple. The board of directors
`
`of both companies knew of these agreements and understood their purpose, intent and motive,
`
`and approved of and ratified them.
`
`
`
`54.
`
`Various persons, partnerships, firms, and corporations not named as
`
`Defendants in this lawsuit, and individuals, the identities of which are presently unknown,
`
`have participated as co-conspirators with Defendants in the offenses alleged in this Complaint,
`
`
`
`
`- 8 -
`Class Action Complaint for Violation of the Sherman Act
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 9 of 28
`
`and have performed acts and made statements in furtherance of the illegal contracts,
`
`combinations, and conspiracies.
`
`
`
`55.
`
`Apple and Google have achieved their size by multiple acquisitions of
`
`competitors and potential competitors, all of which have violated Section 7 of the Clayton
`
`Antitrust Act (15 U.S.C. §18).
`
`
`
`56.
`
`Since 2000, Appl\e has acquired more than 120 competitors, potential
`
`competitors, or “product-extension merger” companies for billions of dollars. FTC vs. Procter
`
`& Gamble Co., 386 U.S. 568 (1967)
`
`
`
`57.
`
`Since 2000, Google has acquired more than 247 competitors, potential
`
`competitors, or “product-extension merger” companies for billions of dollars.
`
`
`
`
`
`58.
`
`59.
`
`Apple and Google are two of the largest companies in the world.
`
`Apple and Google have abused their size by their agreement not to compete, by
`
`their profit sharing, by their preferential search settings, by their exclusion of non-favored
`
`Google advertisers and by their suppression of actual and potential search providers.
`
`
`
`60.
`
`Apple and Google have abused their size by engaging in anticompetitive
`
`conduct, some of which has resulted in fines in the billions of dollars.
`
`
`
`61.
`
`Although “Mere size * * * is not an offense against the Sherman Act unless
`
`magnified to the point at which it amounts to a monopoly * * * size carries with it the
`
`opportunity for abuse that is not to be ignored when the opportunity is proved to have been
`
`utilized in the past.” United States v. Swift, 286 U.S. 106 (1932). Also see United States v.
`
`Aluminum Co. of American, 148 F.2d 416, at 430 (2d Cir 1945), Judge Learned Hand by
`
`virtue of the certificate of the Supreme Court, acting under the authority of the Supreme
`
`Court; United States v. Paramount Pictures, 334 U.S. 141, 174 (1948).
`
`
`
`
`- 9 -
`Class Action Complaint for Violation of the Sherman Act
`
`
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 10 of 28
`
`
`
`
`
`62.
`
`Both Apple and Google have abused their size and have utilized their size in
`
`the past for unlawful purposes, using unlawful means to achieve unlawful objectives.
`
`
`
`63.
`
`Again, both Apple and Google have abused their size by engaging in unlawful
`
`acquisitions under Section 7 of the Clayton Antitrust Act and have been found to have
`
`engaged in anticompetitive conduct. Indeed, Google has been fined billions of dollars for
`
`having abused its size by engaging in anticompetitive conduct.
`
`
`
`64.
`
`The current CEO of Defendant Alphabet Inc. is Sundar Pichai, who is also the
`
`CEO of Google LLC. The current CEO of Defendant Apple Inc. is Tim Cook.
`
`
`
`65.
`
`Plaintiff brings this action under Federal Rule of Civil Procedure Rule 23, on
`
`behalf of itself and a class defined as follows:
`
`All consumers and businesses who paid Google to place advertising on Google
`search in the United States since January 1, 2005, to and including class
`certification herein. Excluded from the class are Defendants, any co-
`conspirators of Defendants, Defendants’ predecessors, successors, parent,
`subsidiaries, affiliates, officers and directors, and any judge, justice or judicial
`officer presiding over this matter and members of their immediate family and
`any jurors.
`
`66.
`
`Class treatment is warranted in this case because:
`
`
`
`(a) The number of potential Plaintiff Class members is so numerous that
`
`
`
`
`
`joinder of all members is impracticable. There are millions of persons and entities
`
`throughout the United States who have paid Google to place advertising on Google
`
`search.
`
`
`
`
`
`(b) There are questions of law or fact common to the class. The
`
`questions of law or fact are common to the class since Defendants have agreed that
`
`Apple will not compete with Google for search business, a per se violation of the
`
`antitrust laws, and other competitive conduct in furtherance of the conspiracy not to
`
`
`
`
`- 10 -
`Class Action Complaint for Violation of the Sherman Act
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 11 of 28
`
`
`
`compete. By reason of the violation, Plaintiff and the class have been injured and
`
`damaged and are substantially threatened with future common injury and damage.
`
`
`
`
`
`(c) The claims or defenses of the representative parties are typical of the
`
`claims or defenses of the class. Every member of the class shares the determination
`
`that a division of the market by reason of an agreement not to compete is a per se
`
`violation of the antitrust laws and has deprived the class of competition in the
`
`placement of advertising on search. Except as to the amount of damages, all other
`
`questions of law and fact are common to the class and predominate over any questions
`
`affecting only individual members of the class.
`
`
`
`(d) The representative parties will fairly and adequately protect the
`
`interests of the class. Plaintiff has engaged counsel experienced and competent in
`
`litigation of this type who will adequately represent the class.
`
`
`
`67.
`
`Defendant Google is one of the wealthiest companies in the world, with a
`
`market value of over $1 trillion and annual revenue exceeding $180 billion.
`
`
`
`68.
`
`As of November 30, 2021, Google shareholder equity is $244.57 billion, and its
`
`market cap is $1.892 trillion.
`
`
`
`69.
`
`Google’s revenue for 2021 through September is $239.21 billion and its net
`
`income is $70.62 billion.
`
`
`
`70.
`
`Google’s CEO Sundar Pichai was awarded a $242 million pay package after
`
`taking control of Alphabet in 2019. Pichai has earned nearly $1 billion in stock grants over the
`
`last five years.
`
`
`
`71.
`
`Google has achieved pre-eminent power in search. When asked to name
`
`Google’s biggest strength in search, Google’s former CEO explained: “Scale is the key. We
`
`just have so much scale in terms of the data we can bring to bear.” By using profit sharing
`
`
`
`
`- 11 -
`Class Action Complaint for Violation of the Sherman Act
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 12 of 28
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`
`agreements to lock up scale for itself and deny it to others, Google has unlawfully built and
`
`maintains its search monopoly, so long as Apple abides by the agreement not to compete
`
`against Google.
`
`72.
`
`Apple is an American technology company that specializes in consumer
`
`electronics, software and online services.
`
`73.
`
`Apple was founded in 1976 and is now the largest information technology
`
`company by revenue in the United States, totaling $274.5 billion in 2020.
`
`74.
`
`Since January 2021, Apple has been the world's most valuable company. As of
`
`November 30, 2021, Apple shareholder equity is $63.09 billion, and its market cap is $2.712
`
`trillion.
`
`75.
`
`Apple’s revenue so far in 2021 through September is $365.82 billion and its net
`
`income is $94.68 billion.
`
`
`
`76.
`
` In 2020, Apple CEO Tim Cook was paid a $14.8 million salary and had $281
`
`million worth of stock options that vested; in 2021 Cook was given 5 million Apple shares
`
`worth about $750 million.
`
`77.
`
`Apple devices account for roughly 60 percent of mobile device usage in the
`
`United States.
`
`78.
`
`Apple’s Mac OS (operating system) accounts for approximately 25 percent of
`
`total computer usage in the United States.
`
`79.
`
`80.
`
`
`
`Apple and Google are currently worth more than $4.5 trillion combined.
`
`Apple and Google believe they are one company: “Our vision is that we work
`
`as if we are one company”; “you can actually merge without merging”; “If we just sort of
`
`merged the two companies, we could just call them AppleGoo”. Their general counsel
`
`described the reality of their combination as “coopetition.”
`
`
`
`
`- 12 -
`Class Action Complaint for Violation of the Sherman Act
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 13 of 28
`
`
`
`81.
`
`Google’s primary source of income is advertising revenue generated from its
`
`Google search engine.
`
`
`
`
`
`82.
`
`Google uses consumer search and consumer information to sell advertising.
`
`83. When a consumer uses Google, the consumer provides personal information
`
`and attention to the delivered searched page in exchange for search results. Google monetizes
`
`the consumer’s information and attention by selling ads.
`
`
`
`84.
`
`As of September 2020, Google controlled 94 percent of the mobile search
`
`engine U.S. market share. As of September 2020, Google controlled 82 percent of the
`
`computer search engine U.S. market share.
`
`
`
`
`
`
`
`85.
`
`Google’s next closest competitor in 2020 commanded less than 2% of the
`
`mobile search market. All the competitors, Yahoo!, Bing, DuckDuckGo, and others have less
`
`than 7% of the market compared to Google’s almost 94%.
`
`
`
`
`
`
`- 13 -
`Class Action Complaint for Violation of the Sherman Act
`
`
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 14 of 28
`
`
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`
`
`
`86.
`
`In the United States, advertisers pay about $40 billion annually to place ads on
`
`Google’s search engine results page (SERP).
`
`
`
`87.
`
`Scale is of critical importance to competition among general search engines for
`
`consumers and search advertisers. Google has long recognized that its competitors will not be
`
`able to compete without adequate scale. The agreement between Apple and Google
`
`suppresses the ability of Google’s competitors to achieve any scale of significance to be able
`
`to compete against Google. That economic prohibition would be eliminated if the agreement
`
`between Apple and Google were dissolved.
`
`
`
`88.
`
`The most effective way for Google to achieve scale is for its general search
`
`engine to be the preset search engine on mobile devices, computers, and other devices; and to
`
`agree with Apple not to compete.
`
`89.
`
`In 2005, Apple began using Google as the automatic, preset, out-of-the-box
`
`general search engine for Apple’s Safari browser.
`
`
`
`
`- 14 -
`Class Action Complaint for Violation of the Sherman Act
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 15 of 28
`
`
`
`90.
`
`In return, Google began to pay Apple a significant percentage of Google’s
`
`yearly general search advertising revenue in the profit-sharing agreement.
`
`91.
`
`In 2007, Google extended this profit-sharing agreement to cover Apple’s
`
`iPhones.
`
`92.
`
`In 2016, the agreement expanded further to include additional search access
`
`points — Siri (Apple’s voice-activated assistant) and Spotlight (Apple’s system-wide search
`
`feature) — making Google the automatic, preset, general search engine for all of Apple’s
`
`devices.
`
`93.
`
`Currently, Google’s profit-sharing agreements with Apple give Google an
`
`exclusive, preset position on all significant search access points on Apple computers and
`
`mobile devices.
`
`
`
`94.
`
`In exchange, since 2005, Google has agreed to share billions of dollars of
`
`advertising revenue with Apple each year in consideration for Apple’s commitment not to
`
`compete in the search market.
`
`
`
`95.
`
`Since 2005, Google has become the primary, out-of-the-box exclusive search
`
`engine on Apple’s Safari browser on its Mac computer, and, since 2007, on Apple’s iPhone.
`
`
`
`96.
`
`Apple has been paid for the profits it would have made if it had competed with
`
`Google without having the expense of doing so.
`
`
`
`97.
`
`By reason of the profit-sharing and the discriminatory treatment in favor of
`
`Google on its devices, Apple has contributed to Google’s dominant position in the search
`
`market because the more money Google makes in search, the more money Apple makes under
`
`the agreements.
`
`
`
`
`- 15 -
`Class Action Complaint for Violation of the Sherman Act
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 16 of 28
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`
`
`
`98.
`
`The non-compete agreement, the profit-sharing agreement, and the out-of-the-
`
`box preference agreement remove any incentive on the part of Apple to compete against
`
`Google in the search business.
`
`
`
`99.
`
`Google’s CEO, Eric Schmidt, served on Apple’s board of directors until 2009.
`
`In 2007 while serving as both an Apple Director and as Google CEO he stood onstage at the
`
`formal unveiling of the Apple iPhone with Steve Jobs, the founder of Apple, and blustered
`
`that, with Google search on the iPhone, “you can actually merge without merging” and “If we
`
`just sort of merged the two companies, we could just call them AppleGoo.”
`
`100. Apple told Google: “Our vision is that we work as if we are one company.”
`
`
`
`101.
`
`In 2008, Jobs met at Google’s headquarters near Palo Alto with Larry Page and
`
`Sergei Brin, the two founders of Google, and with Andy Rubin, the head of Android
`
`development for Google, to discuss Google’s recent purchase of the Android operating
`
`system. Brin and Page considered Jobs a mentor.
`
`
`
`102.
`
`Jobs agreed to continue to give Google access to the exclusive, out-of-the-box
`
`search position on the iPhone, as long as there were “good relations” between the two
`
`companies. According to Jobs: “I said we would, if we had good relations, guarantee Google
`
`access to the iPhone and guarantee it one or two icons on the home screen.”
`
`
`
`103.
`
`Jobs continued to meet with Google executives until his death in October 2011.
`
`In mid 2010, he met with Eric Schmidt who was then still CEO of Google, at a café at the
`
`Stanford Shopping Center. In mid 2011 he met again with Larry Page in Job’s living room.
`
`
`
`104. At each of these meetings these top executives solidified their agreement that
`
`they would cooperate rather than compete against each other.
`
`
`
`105. On information and belief, Google has paid Apple between $8 and 15 billion a
`
`year – an amount which is pure profit to Apple.
`
`
`
`
`- 16 -
`Class Action Complaint for Violation of the Sherman Act
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 17 of 28
`
`
`
`106. Google makes approximately $25 billion a year in ad revenue from its searches
`
`on Apple’s devices, iPhones, iPads, and Macs.
`
`
`
`107. Google estimates that, in 2019, almost 50 percent of its search traffic originated
`
`on Apple devices.
`
`
`
`108.
`
`In the past, Apple had actively worked on developing its own general search
`
`engine as a potential competitor to Google.
`
`
`
`109.
`
`It has been estimated that if Apple were to launch its own search engine in
`
`competition with Google, at least $15 billion a year of Google revenue would go to Apple.
`
`This is equal to the estimated payment to Apple in 2021.
`
`
`
`
`
`110. Apple is the major threat to Google as a potential competitor in search.
`
`111. Apple could make it difficult for its iPhone users to get to Google – and Google
`
`knew it.
`
`112. But Apple has agreed with Google that it will not develop nor offer a general
`
`search engine in competition with Google.
`
`113. Google has locked in Apple’s agreement not to compete by paying Apple
`
`billions of dollars from the revenues it derives from advertisers each year.
`
`114. The profits Google shares with Apple make up approximately 15 - 20 percent
`
`of Apple’s worldwide net income.
`
`115.
`
` By paying billions of dollars to Apple each year, Google has locked in Apple’s
`
`commitment not to compete with Google in search.
`
`116. By paying Apple billions of dollars each year to preserve its position as the
`
`initial, out-of-the-box exclusive search provider on Apple devices, Google and Apple have
`
`shared monopoly control and have the power to set prices and exclude competition in search.
`
`
`
`
`- 17 -
`Class Action Complaint for Violation of the Sherman Act
`
`
`
` 1
` 2
` 3
` 4
` 5
` 6
` 7
` 8
` 9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`Case 4:21-cv-10001-HSG Document 1 Filed 12/27/21 Page 18 of 28
`
`117. Consumers will rarely change the search provider on their devices after the
`
`devices have been purchased.
`
`118. By eliminating potential competition from Apple, and becoming Apple’s
`
`exclusive search engine, Google can charge higher fees for search advertising and can steer
`
`consumers to its own proprietary apps.
`
`119. Google’s own documents admit that Apple’s “Safari default is a significant
`
`revenue channel” and that los