A Canadian court upheld a class-action lawsuit against Apple over Google's search deal

A British Columbia Supreme Court judge has upheld a class-action lawsuit against Apple over allegations that its search deal with Google stifled competition and raised ad prices. Here are the details.

A little background

In recent years, Apple’s deal with Alphabet to make Google the default search engine on Safari has drawn attention from regulators in the US, UK and Australia, while related concerns about search competition have also come under scrutiny in the EU and Japan.

While the details of each investigation differ, they all raise concerns about the impact of Google’s dominance in search, as well as the extent to which its agreements with other companies may restrict competition.

Recently, Apple’s deal with Google received considerable attention during the US Department of Justice’s antitrust case against the search giant, which included testimony from Apple executives Eddy Cue and John Giannandre. He joined Apple from Google in 2018 and led its artificial intelligence efforts until he stepped down earlier this year.

As a result of the US case, a federal judge ruled in August 2024 that Google had illegally maintained a monopoly on online search through anti-competitive agreements, including one with Apple.

Now, evidence presented during that trial has become the focus of a class-action lawsuit against Apple in Canada, which was recently upheld by a British Columbia Supreme Court judge.

Canadian Class Action Certification

The case was originally filed 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, meanwhile, argued that its deal with Google was a legitimate distribution arrangement rather than an illegal conspiracy. The company also argued that Google was an appropriate defendant and described itself as an “innocent bystander”.

Interestingly, the suit originally named both Apple and Google as defendants, but the plaintiff later dropped Google from the case after a dispute over the arbitration clause in its advertising contracts.

With Apple now the sole defendant, Judge Thomas allowed the case to proceed as a class action, finding 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, and the court also allowed the issue of punitive damages to be heard.

The class-action lawsuit covers Canadians who have bought 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 ad revenue.

Importantly, the ruling does not prove that Apple engaged in anti-competitive conduct, but simply allows the allegations to proceed as a class action.

From the decision:

The central thesis raised by these lawsuits is that Apple could have used its resources and distribution network to enter the search engine market, but chose not to because Google paid Apple billions of dollars in revenue share payments to make Google the default search provider on Apple products. This arrangement gave Google market power and allowed it to charge competitive prices for advertising on search engines.

In my view, it is the common purpose of carrying out conduct prohibited by section 45 of the Competition Act, so it is not “clear and obvious” that the plaintiff did not apply the agreement between Google and Apple not to compete in the search engine market.

At one point in his decision, Judge Thomas cites Giannandrea’s testimony and directly quotes Cue’s from the US antitrust trial before concluding that “it does provide some basis in fact to support the conclusion that Apple did not compete with Google in the search engine market because of its agreement with Google.”

Interestingly, the judge also acknowledges Apple’s evidentiary objections, agreeing that “plaintiff has selected evidence to support its case,” but adds that he believes “it is appropriate to do so at this stage of the proceedings.”

Thanks to a green class action lawsuit, the case may now move to trial, though no date has yet been announced.

You can read the decision in full here.