The U.S. Federal Trade Commission subpoenaed Apple Inc. (AAPL) as part of its antitrust probe of Google Inc. (GOOG), seeking information on how the computer maker uses 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 Corp. (MSFT) 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 LLP 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.
Advertising Rates
In its broader antitrust investigation of Mountain View, California-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.
Mobile Versus Desktop
"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 who has a buy rating on Google stock. Schachter estimated that by the end of the year 25 percent to 30 percent of searches would take place on mobile devices, up from about 15 percent currently.
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, California- based Apple, and Cecelia Prewett of FTC, declined to comment on the subpoenas. Adam Kovacevich, a Google spokesman, didn't respond immediately to two phone messages and an e-mail seeking commment.
To contact the reporters on this story: Sara Forden in Washington at sforden@bloomberg.net; Jeff Bliss in Washington at jbliss@bloomberg.net.
To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net: Steven Komarow at skomarow1@bloomberg.net
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