WASHINGTON — The Federal Trade Commission has subpoenaed Apple as part of its antitrust probe of Google, seeking information on how the computer maker incorporates the search engine on the iPhone and iPad, two people familiar with the matter said.
WASHINGTON — The Federal Trade Commission has subpoenaed Apple as part of its antitrust probe of Google, seeking information on how the computer maker incorporates the search engine on the iPhone and iPad, two people familiar with the matter said.
The agency’s request for documents includes the agreements that made Google the preferred search engine on Apple’s mobile devices, said the people, who weren’t authorized to speak publicly and declined to be identified.
Google rivals such as Microsoft have criticized these agreements as anticompetitive.
The subpoena indicates the FTC is intensifying its scrutiny of Google’s business practices. Details of the Apple-Google relationship may show whether Google is abusing its dominance of Internet search to boost revenue in the mobile phone advertising market, said Allen Grunes, an antitrust lawyer at Brownstein Hyatt Farber Schreck in Washington.
“As mobile search gets more widespread, the default setting becomes more significant,” said Grunes, who doesn’t represent Google or its rivals.
The FTC has sent subpoenas to other handset makers and wireless carriers, said one of the people, who declined to name the companies.
In its broader antitrust investigation of Mountain View, Calif.-based Google that began about a year ago, the FTC is examining whether the company unfairly increases advertising rates for competitors and ranks search results to favor its own businesses, such as its social-networking site Google+, two people familiar with the situation said in January.
Google has been the default search engine for the iPhone since Apple introduced the device in 2007 and on the iPad since its 2010 debut, as well as for the iPod Touch. Apple also uses Google Maps as a favored service on the iPhone and iPad.
The FTC’s probe of Google is also looking at whether the company is using its control of the Android mobile operating system to harm competition, two people familiar with the probe said last year. Apple and Google have been vying for leadership in the smartphone market since the first Android-based handset came out in 2008.
“It’s very likely in the next few years, we’ll see mobile search outstripping desktop search,” said Ben Schachter, a New York-based analyst with Macquarie Capital. Schachter estimated that by the end of the year 25 percent to 30 percent of searches would take place on mobile devices.
Schachter said consumers usually leave the default settings on smart phones or other mobile devices.
“Most people don’t even know what default search means they just know there’s a box they can use to look for information,” Schacter said.
Google’s Android became the dominant mobile phone operating system last year and led the market with a 50.9 percent share in the fourth quarter of 2011, compared with the iPhone’s iOS mobile operating system’s 23.8 percent share, according to a February report by Gartner Inc., a Stamford, Connecticut researcher.
Kristin Huguet, a spokeswoman for Cupertino, Calif.-based Apple, Cecelia Prewett of the FTC, and Adam Kovacevich, a Google spokesman, declined to comment on the subpoenas.
Google last year earned $1.3 billion in search-related revenue on Apple products, according to a March 8 report from Macquarie Capital. Google paid Apple $1 billion to be the default search engine, keeping only $335 million of the total amount, the report said.
In January, eMarketer, a New York-based research firm, estimated Google’s share of U.S. mobile-ad revenue was 52 percent in 2011, driven by searches. Google earns about 95 percent of all U.S. mobile-search ad revenue, the firm said.
Google was the leader in U.S. Internet search in February with 66.4 percent of the market, according to ComScore Inc., an Internet market research firm based in Reston, Va.
Microsoft made a failed attempt to wrest away the default search engine position on the iPhone from Google in 2010, according to two people familiar with the matter.
Apple sold more than 183 million iPhones and more than 55 million iPads by the end of last year. The products together accounted for more than 70 percent of the company’s sales in the last quarter.
The FTC’s subpoena is the latest twist in the relationship between Google and Apple. The two companies were linked for much of last decade, with Google Chairman Eric Schmidt serving on Apple’s board of directors.
