Canadian court certifies class action against Apple over Google search deal

A British Columbia Supreme Court judge has certified a class action against Apple over allegations that its search agreement with Google stifled competition and inflated advertising prices. Here are the details.

A bit of background

In recent years, Apple’s deal with Alphabet to make Google the default search engine on Safari has drawn regulatory attention in the US, the UK, and Australia, while related search competition concerns 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 might be limiting competition.

More recently, Apple’s agreement with Google received significant attention during the US Department of Justice’s antitrust case against the search giant, which included testimony from Apple executives Eddy Cue and John Giannandrea. The latter joined Apple from Google in 2018 and led its AI efforts until stepping down earlier this year.

As a result of the US case, a federal judge ruled in August 2024 that Google had illegally maintained its monopoly in online search through anticompetitive agreements, including its deal with Apple.

Now, evidence presented during that trial has become central to a class action against Apple in Canada, which a British Columbia Supreme Court judge recently certified.

Canadian class action certified

The case 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, meanwhile, argued that its agreement with Google was a legitimate distribution arrangement rather than an unlawful conspiracy. The company also maintained 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 later 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 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 has also allowed 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 simply allows the allegations to proceed as a class action.

From the decision:

The central proposition raised by these pleadings 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, enabling it to charge supracompetitive advertising prices on search engines.

In my view, this pleads a common purpose to perform an act prohibited by s 45 of the Competition Act, such that it is not “clear and obvious” that the plaintiff has not pleaded an agreement between Google and Apple not to compete in the search engine market.

At one point in his decision, Justice Thomas cites Giannandrea’s testimony and directly quotes Cue’s from the US antitrust trial, before concluding 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.”

Interestingly, the judge also acknowledges Apple’s objections to the evidence, agreeing that “the plaintiff has cherry-picked evidence to support his case,” but adding that, in his view, “it is appropriate to do so at this stage in the proceedings.”

With the class action greenlit, the case can now move forward toward trial, though no date has been announced yet.

You can read the decision in full here.