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`Case 4:21-cv-10001-HSG Document 33 Filed 03/18/22 Page 1 of 32
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`John E. Schmidtlein (CA State Bar No. 163520)
`Carol J. Pruski (CA State Bar No. 275953)
`WILLIAMS & CONNOLLY LLP
`725 Twelfth Street, N.W.
`Washington, D.C. 20005
`Telephone:
`(202) 434-5000
`Facsimile:
`(202) 434-5029
`Email:
`jschmidtlein@wc.com
`Email:
`cpruski@wc.com
`
`Attorneys for Defendants Google LLC, Alphabet Inc.,
`XXVI Holdings, Inc., Sundar Pichai, and Eric Schmidt
`
`Steven C. Sunshine (pro hac vice)
`Jack P. DiCanio (CA State Bar No. 138752)
`SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
`525 University Avenue
`Palo Alto, CA 94301
`
`Telephone:
`(650) 470-4660
`
`Facsimile:
`(213) 621-5430
`Email:
`steven.sunshine@skadden.com
`Email:
`jack.dicanio@skadden.com
`
`
`Attorneys for Defendants Apple Inc. and Tim Cook
`
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`OAKLAND DIVISION
`
`Case No. 4:21-cv-10001-HSG
`DEFENDANTS’ NOTICE OF MOTION
`AND MOTION TO DISMISS PLAINTIFF’S
`COMPLAINT; MEMORANDUM OF
`POINTS AND AUTHORITIES IN
`SUPPORT THEREOF
`Hearing Date: August 11, 2022
` Time: 2:00 p.m.
` Place: Courtroom 2
` Judge: Hon. Haywood S. Gilliam, Jr.
`
`
`
`
`CALIFORNIA CRANE SCHOOL, INC.,
`on behalf of itself and all others similarly
`situated,
`
`Plaintiff,
`
`v.
`
`GOOGLE LLC, ALPHABET INC., XXVI
`HOLDINGS, INC., APPLE INC., TIM
`COOK, SUNDAR PICHAI, and ERIC
`SCHMIDT,
`
`Defendants.
`
`
`
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`
`
`
`
`

`

`Case 4:21-cv-10001-HSG Document 33 Filed 03/18/22 Page 2 of 32
`
`
`NOTICE OF MOTION AND MOTION
`
`TO THE COURT, ALL PARTIES, AND THEIR ATTORNEYS OF RECORD:
`
`PLEASE TAKE NOTICE that on August 11, 2022, at 2:00 p.m., or as soon thereafter as
`this matter may be heard, either in Courtroom 2 of this Court, located on the 4th Floor of the United
`States Courthouse, 1301 Clay Street, Oakland, California, or by videoconference or teleconference,
`
`Defendants Google LLC, Alphabet Inc., XXVI Holdings, Inc., Apple Inc., Tim Cook, Sundar Pichai,
`and Eric Schmidt (collectively, “Defendants”) will move the Court for an order dismissing Plaintiff
`California Crane School Inc.’s Class Action Complaint pursuant to Rule 12(b)(6) of the Federal
`Rules of Civil Procedure.
`
`Defendants respectfully request an order dismissing without leave to amend all causes of
`action brought against them in the above-captioned matter. This Motion is based upon this Notice;
`the accompanying Memorandum of Points and Authorities; any reply memorandum; the pleadings
`and files in this action; and such other matters Defendants may present at or before the hearing.
`
`
`DATED: March 18, 2022
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`WILLIAMS & CONNOLLY LLP
`By: /s/ John E. Schmidtlein
`
`John E. Schmidtlein (CA State Bar No. 163520)
`Carol J. Pruski (CA State Bar No. 275953)
`WILLIAMS & CONNOLLY LLP
`725 Twelfth Street, N.W.
`Washington, D.C. 20005
`Telephone:
`(202) 434-5000
`Facsimile:
`(202) 434-5029
`Email:
`jschmidtlein@wc.com
`Email:
`cpruski@wc.com
`
`Attorneys for Defendants Google LLC, Alphabet Inc.,
`XXVI Holdings Inc., Sundar Pichai, and Eric Schmidt
`
`Steven C. Sunshine (pro hac vice)
`Jack P. DiCanio (CA State Bar No. 138752)
`SKADDEN, ARPS, SLATE, MEAGHER & FLOM
`LLP
`525 University Avenue
`Palo Alto, CA 94301
`
`Telephone:
`(650) 470-4660
`
`Facsimile:
`(213) 621-5430
`Email:
`jack.dicanio@skadden.com
`
`Attorneys for Defendants Apple Inc. and Tim Cook
`
`
`- i -
`DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS
`Case No. 4:21-cv-10001-HSG
`
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`

`

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`Case 4:21-cv-10001-HSG Document 33 Filed 03/18/22 Page 3 of 32
`
`
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`
`
`II.
`
`
`
`
`TABLE OF CONTENTS
`
`INTRODUCTION ............................................................................................................................... 1
`BACKGROUND ................................................................................................................................. 3
`LEGAL STANDARD .......................................................................................................................... 6
`ARGUMENT ....................................................................................................................................... 6
`
`THE COMPLAINT FAILS TO STATE A CLAIM UNDER SHERMAN ACT SECTION
`I.
`1 BECAUSE IT DOES NOT ALLEGE FACTS THAT PLAUSIBLY SUGGEST THE
`EXISTENCE OF A PER SE HORIZONTAL AGREEMENT NOT TO COMPETE. ........ 6
`A. THE COMPLAINT FAILS TO PLEAD DIRECT EVIDENCE OF A
`
` HORIZONTAL CONSPIRACY. ................................................................................... 7
`B. THE COMPLAINT FAILS TO PLEAD CIRCUMSTANTIAL EVIDENCE OF A
`
`HORIZONTAL CONSPIRACY. ................................................................................... 9
`THE COMPLAINT FAILS TO STATE A CLAIM UNDER SHERMAN ACT SECTION
`2 BECAUSE IT DOES NOT ALLEGE FACTS THAT PLAUSIBLY SUGGEST THE
`EXISTENCE OF A CONSPIRACY TO MONOPOLIZE, A RELEVANT MARKET
`THAT WAS MONOPOLIZED, OR A SPECIFIC INTENT TO MONOPOLIZE. ........... 13
`A. THE COMPLAINT DOES NOT ALLEGE FACTS PLAUSIBLY SUGGESTING
`
`THE EXISTENCE OF A CONSPIRACY. ................................................................... 13
`B. THE COMPLAINT DOES NOT ADEQUATELY ALLEGE A RELEVANT
`
`MARKET. ..................................................................................................................... 14
`C. PLAINTIFF FAILS TO ALLEGE THAT APPLE POSSESSED THE REQUISITE
`
`SPECIFIC INTENT. ..................................................................................................... 14
`THE COMPLAINT FAILS TO ALLEGE FACTS SUFFICIENT TO ESTABLISH
`III.
`ANTITRUST STANDING. ................................................................................................ 16
`
`THE STATUTE OF LIMITATIONS BARS DAMAGES PREDATING
`IV.
`DECEMBER 27, 2017. ....................................................................................................... 20
`
`THE COURT SHOULD DISMISS THE COMPLAINT’S REQUEST FOR
`V.
`DISGORGEMENT. ............................................................................................................ 24
`
`CONCLUSION .................................................................................................................................. 24
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`DEFENDANTS’ MEMORANDUM IN SUPPORT OF MOTION TO DISMISS
`Case No. 4:21-cv-10001-HSG
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`

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`Case 4:21-cv-10001-HSG Document 33 Filed 03/18/22 Page 4 of 32
`
`
`TABLE OF AUTHORITIES
`
`
`
`CASES
`
`
`
`Am. Ad Mgmt., Inc. v. Gen. Tel. Co. of Cal., 190 F.3d 1051 (9th Cir. 1999) ..........................16, 18
`
`Page(s)
`
`AMG Cap. Mgmt., LLC v. Fed. Trade Comm’n, 141 S. Ct. 1341 (2021) ......................................24
`
`Ashcroft v. Iqbal, 556 U.S. 662 (2009) ......................................................................................6, 24
`
`Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters,
`459 U.S. 519 (1983) ...........................................................................................................18, 19
`
`Auto Sound Inc. v. Audiovox Elecs. Corp., 2012 WL 12892938 (C.D. Cal. Dec. 3, 2012) ...........10
`
`Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .................................................................. passim
`
`Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977) ............................................16
`
`Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717 (1988) ........................................................7
`
`Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104 (1986) .........................................................18
`
`City of Oakland v. Oakland Raiders, 20 F.4th 441 (9th Cir. 2021) .........................................18, 19
`
`Coal. for ICANN Transparency Inc. v. VeriSign, Inc.,
`771 F. Supp. 2d 1195 (N.D. Cal. 2011) ...................................................................................24
`
`Conmar Corp. v. Mitsui & Co. (U.S.A.), 858 F.2d 499 (9th Cir. 1988) ........................................23
`
`Digital Sun Corp. v. The Toro Co., 2011 WL 1044502 (N.D. Cal. Mar. 22, 2011) ........................3
`
`Eagle v. Star-Kist Foods, Inc., 812 F.2d 538 (9th Cir. 1987) ........................................................19
`
`Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d 990 (9th Cir. 2014) .....................12
`
`Fed. Trade Comm’n v. Qualcomm Inc., 969 F.3d 974 (9th Cir. 2020) .........................................17
`
`Fonseca v. Hewlett-Packard Co., 2020 WL 6083448 (S.D. Cal. Feb. 3, 2020) ............................11
`
`G.U.E. Tech, LLC v. Panasonic Avionics Corp.,
`2015 WL 12696203 (C.D. Cal. Sept. 15, 2015) ......................................................................17
`
`Garrison v. Oracle Corp., 159 F. Supp. 3d 1044 (N.D. Cal. 2016) ..............................................22
`
`Garrison v. Oracle Corp., 2015 WL 1849517 (N.D. Cal. Apr. 22, 2015) ....................................23
`
`Granddad Bread, Inc. v. Continental Baking Co., 612 F.2d 1105 (9th Cir. 1979) .......................14
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`DEFENDANTS’ MEMORANDUM IN SUPPORT OF MOTION TO DISMISS
`Case No. 4:21-cv-10001-HSG
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`

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`Case 4:21-cv-10001-HSG Document 33 Filed 03/18/22 Page 5 of 32
`
`
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`Hexcel Corp. v. Ineos Polymers, Inc., 681 F.3d 1055 (9th Cir. 2012) ....................................21, 22
`
`Hicks v. PGA Tour, Inc., 897 F.3d 1109 (9th Cir. 2018) ...............................................................14
`
`Hu Honua Bioenergy, LLC v. Hawaiian Elec. Indus., Inc.,
`2018 WL 5891743 (D. Haw. Nov. 9, 2018) ............................................................................16
`
`In re Animation Workers Antitrust Litig., 87 F. Supp. 3d 1195 (N.D. Cal. 2015) ...................21, 22
`
`In re Baby Food Antitrust Litig., 166 F.3d 112 (3d Cir. 1999) ........................................................8
`
`In re Cal. Bail Bond Antitrust Litig., 511 F. Supp. 3d 1031 (N.D. Cal. 2021) ..............................12
`
`In re Cal. Title Ins. Antitrust Litig., 2009 WL 1458025 (N.D. Cal. May 21, 2009) ......................11
`
`In re Cathode Ray Tube (CRT) Antitrust Litig.,
`2016 WL 3648478 (N.D. Cal. July 7, 2016) ............................................................................24
`
`In re Citric Acid Litig., 191 F.3d 1090 (9th Cir. 1999)............................................................7, 8, 9
`
`In re Flat Glass Antitrust Litig., 385 F.3d 350 (3rd Cir. 2004) .....................................................11
`
`In re Graphics Processing Units Antitrust Litig.,
`2007 WL 2127577 (N.D. Cal. July 24, 2007) ..........................................................................12
`
`In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651 (7th Cir. 2002) .......................8, 11
`
`In re Ins. Brokerage Antitrust Litig., 618 F.3d 300 (3d Cir. 2010)..................................................9
`
`In re Musical Instruments & Equip. Antitrust Litig.,
`798 F.3d 1186 (9th Cir. 2015) ...................................................................................7, 9, 10, 11
`
`In re Nat’l Ass’n of Music Merchs., Musical Instruments & Equip. Antitrust Litig.,
`2012 WL 3637291 (S.D. Cal. Aug. 20, 2012) .........................................................................11
`
`In re Online DVD Rental Antitrust Litig., 2011 WL 1629663 (N.D. Cal. Apr. 29, 2011) ............18
`
`Jacobs v. Tempur-Pedic Int’l, Inc., 626 F.3d 1327 (11th Cir. 2010) .......................................13, 14
`
`Jacobsen v. Katzer, 2006 WL 3000473 (N.D. Cal. Oct. 20, 2006) ...............................................18
`
`Kelsey K. v. NFL Enters., LLC, 254 F. Supp. 3d 1140 (N.D. Cal. 2017) ........................................9
`
`Kendall v. Visa U.S.A., Inc., 518 F.3d 1042 (9th Cir. 2008) ...............................................7, 10, 12
`
`Klehr v. A.O. Smith Corp., 521 U.S. 179 (1997) ...........................................................................21
`
`Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979 (9th Cir. 2000) .....................................18
`
`Lee v. Kitchables Prods., 2021 WL 3173253 (N.D. Cal. July 27, 2021) ......................................24
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`DEFENDANTS’ MEMORANDUM IN SUPPORT OF MOTION TO DISMISS
`Case No. 4:21-cv-10001-HSG
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`Case 4:21-cv-10001-HSG Document 33 Filed 03/18/22 Page 6 of 32
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`
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`Maguca v. Aurora Loan Servs., 2009 WL 3467750 (C.D. Cal. Oct. 28, 2009) ............................11
`
`Mayor & City Council of Baltimore v. Citigroup, Inc., 709 F.3d 129 (2d Cir. 2013) .....................8
`
`McCabe Hamilton & Renny Co. v. Matson Navigation Co.,
`2008 WL 2233740 (D. Haw. Apr. 9, 2008) .............................................................................16
`
`Microsystems Inc. v. Hynix Semiconductor Inc., 608 F. Supp. 2d 1166 (N.D. Cal. 2009)..............8
`
`Murphy Tugboat Co. v. Shipowners & Merchs. Towboat Co., Ltd.,
`467 F. Supp. 841 (N.D. Cal. 1979) ..........................................................................................14
`
`Name.Space, Inc. v. Internet Corp. for Assigned Names & Numbers,
`795 F.3d 1124 (9th Cir. 2015) .................................................................................................12
`
`Neubronner v. Milken, 6 F.3d 666 (9th Cir. 1993) ........................................................................23
`
`Newcal Indus., Inc. v. Ikon Off. Sol., 513 F.3d 1038 (9th Cir. 2008) ............................................13
`
`NorthBay Healthcare Grp., Inc. v. Kaiser Found. Health Plan, Inc.,
`2017 WL 6059299 (N.D. Cal. Dec. 7, 2017) ...........................................................................13
`
`Oliver v. SD-3C LLC, 751 F.3d 1081 (9th Cir. 2014) ...................................................................22
`
`Pac. Steel Grp. v. Com. Metals Co., 2021 WL 2037961 (N.D. Cal. May 21, 2021) .....................10
`
`Pace Indus., Inc. v. Three Phx. Co., 813 F.2d 234 (9th Cir. 1987) ...............................................21
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`Paladin Assocs., Inc. v. Montana Power Co., 328 F.3d 1145 (9th Cir. 2003) ..............................13
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`Park Irmat Drug Corp. v. Express Scripts Holding Co., 911 F.3d 505 (8th Cir. 2018) ..................9
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`Paycom Billing Servs., Inc. v. Mastercard Int’l, Inc., 467 F.3d 283 (2d Cir. 2006) ......................20
`
`Peterson v. Sutter Med. Found., 2022 WL 316677 (N.D. Cal. Feb. 2, 2022) ...............................24
`
`Prime Healthcare Servs., Inc. v. Serv. Emps. Int’l Union,
`2013 WL 3873074 (S.D. Cal. July 25, 2013) ..........................................................................14
`
`Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729 (9th Cir. 1987) ..............................12, 16
`
`Somers v. Apple, Inc., 729 F.3d 953 (9th Cir. 2013) .....................................................................16
`
`Space Expl. Technologies Corp. v. Boeing Co.,
`2006 WL 7136649 (C.D. Cal. May 12, 2006) ...................................................................17, 19
`
`Spindler v. Johnson & Johnson Corp., 2011 WL 13278876 (N.D. Cal. Jan. 21, 2011) ................22
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`Spinelli v. Nat’l Football League, 96 F. Supp. 3d 81 (S.D.N.Y. 2015) .........................................20
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`DEFENDANTS’ MEMORANDUM IN SUPPORT OF MOTION TO DISMISS
`Case No. 4:21-cv-10001-HSG
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`Case 4:21-cv-10001-HSG Document 33 Filed 03/18/22 Page 7 of 32
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`Standfacts Credit Servs., Inc. v. Experian Info. Sols., Inc.,
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`405 F. Supp. 2d 1141 (C.D. Cal. 2005) .............................................................................13, 15
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`Stanislaus Food Prod. Co. v. USS-POSCO Indus.,
`2011 WL 2678879 (E.D. Cal. July 7, 2011) ......................................................................13, 15
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`Stanislaus Food Prod. Co. v. USS-POSCO Indus., 803 F.3d 1084 (9th Cir. 2015) ......................11
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`Thorman v. Am. Seafoods Co., 421 F.3d 1090 (9th Cir. 2005)......................................................23
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`Ticketmaster LLC v. Designer Tickets & Tours, Inc.,
`2008 WL 649804 (C.D. Cal. Mar. 10, 2008) ...........................................................................17
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`Toscano v. PGA Tour, Inc., 201 F. Supp. 2d 1106 (E.D. Cal. 2002) ......................................18, 20
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`TSI USA LLC v. Uber Technologies, Inc., 2018 WL 4638726 (N.D. Cal. Sept. 25, 2018) ...........24
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`Valspar Corp. v. E.I. Du Pont De Nemours & Co., 873 F.3d 185 (3d Cir. 2017) .........................11
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`Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) ....................................................23
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`Watson Carpet & Floor Covering, Inc. v. Mohawk Indus., Inc.,
`2014 WL 4347589 (M.D. Tenn. Sept. 2, 2014) .........................................................................8
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`Zenith Radio Corp. v. Hazeltine Rsch., Inc., 401 U.S. 321 (1971) ................................................21
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`STATUTES
`
`15 U.S.C. § 4 ......................................................................................................................21, 22, 24
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`15 U.S.C. § 15(a) ...........................................................................................................................24
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`15 U.S.C. § 15b ..............................................................................................................................21
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`15 U.S.C. § 16 ................................................................................................................................24
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`15 U.S.C. § 26 ................................................................................................................................24
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`FEDERAL RULES
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`Federal Rule of Civil Procedure 9(b) .............................................................................................23
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`Federal Rule of Civil Procedure 12(b)(6) ............................................................................6, 14, 24
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`OTHER AUTHORITIES
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`DOJ-FTC Antitrust Guidelines for the Licensing of Intellectual Property,
`2017 WL 282889 (2017) ..........................................................................................................10
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`- vi -
`DEFENDANTS’ MEMORANDUM IN SUPPORT OF MOTION TO DISMISS
`Case No. 4:21-cv-10001-HSG
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`

`Case 4:21-cv-10001-HSG Document 33 Filed 03/18/22 Page 8 of 32
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`MEMORANDUM OF POINTS AND AUTHORITIES
`
`
`INTRODUCTION
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`Google and Apple provide complementary products and services that facilitate internet
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`search: Google offers an internet search engine, and Apple offers an internet browser and a wide
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`range of internet-accessible devices. As is commonplace among companies that offer
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`complementary products and services, Google and Apple integrated their offerings to create
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`efficiencies and enrich the user experience. Pursuant to publicly reported agreements, known as
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`Information Services Agreements, Apple has agreed to set Google as the default search provider in
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`its Safari web browser in the United States because Google offers the highest quality search results.
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`The agreements do not prevent Apple from integrating alternative search engines into Safari. In
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`fact, Safari users in the United States can choose among Microsoft’s Bing, Yahoo!, DuckDuckGo,
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`and Ecosia. Pursuant to the agreements, Google has agreed to pay Apple a share of the advertising
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`revenues generated by searches performed on Google by Safari users, another standard practice for
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`search engines integrated via a browser’s search field.
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`Although this vertical search agreement between search engine provider and web browser
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`developer has been public knowledge for over 15 years (and has been a common form of agreement
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`between search providers and web browser companies during this time, including between other
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`search providers and Apple), Plaintiff attempts to spin this vertical business relationship into a per
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`se unlawful horizontal conspiracy whereby Apple also has agreed not to compete with Google. But
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`no such horizontal agreement exists, either as part of the Information Services Agreements or
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`elsewhere, and Plaintiff’s Complaint does not allege facts plausibly suggesting otherwise. Stripped
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`of its repetitive conclusory assertions of conspiracy, the Complaint contains nothing more than a
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`recitation of benign, public facts that do not show an unlawful conspiracy as a matter of law.
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`Because these allegations cannot support the per se horizontal Sherman Act violation or the
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`Case 4:21-cv-10001-HSG Document 33 Filed 03/18/22 Page 9 of 32
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`conspiracy to monopolize asserted in this case, the Complaint fails to state a claim for relief and
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`should be dismissed with prejudice.
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`Moreover, even if the Complaint had set out viable claims, Plaintiff lacks antitrust standing
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`to assert them. The Complaint contends that, as a result of a far-fetched non-compete agreement
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`between Google and Apple, Plaintiff and the putative class it seeks to represent paid inflated prices
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`to place search advertising on Google. But that theory of alleged injury requires at least five
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`speculative steps to even loosely connect the dots between the challenged restraint and the injury
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`claimed. An injury would exist only if—in the absence of the (non-existent) non-compete
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`agreement—Apple developed its own competing search technology and launched a search engine
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`product for use by consumers, used this new search product as the default search provider for the
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`Safari web browser, developed wholly separate search advertising technology and launched a search
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`advertising business in conjunction with a new search engine product (neither of which exist today),
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`and these wholly new businesses resulted in Plaintiff and class members winning search advertising
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`auctions on Google with lower bids than they previously paid. This attenuated theory, unsupported
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`by any factual allegations, cannot satisfy the strict antitrust standing factors.
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`Plaintiff’s baseless allegations also do not support claims for damages that date back to 2005,
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`or any request for disgorgement of the revenue share payments made by Google to Apple.
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`According to the Complaint, consumers suffered monetary damages when they purchased Google
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`search advertisements at allegedly inflated prices; however, that means the four-year statute of
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`limitations bars all claims based on sales before December 27, 2017. And Plaintiff’s request that
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`the Court disgorge payments from Google to Apple is a remedy categorically unavailable here.
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`Put simply, Plaintiff overreaches at every step. It asserts claims that find no support in the
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`alleged facts; it pursues a theory of injury connected by a multitude of tenuous, speculative links
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`that do not satisfy antitrust standing requirements; it raises claims barred in substantial part by the
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`DEFENDANTS’ MEMORANDUM IN SUPPORT OF MOTION TO DISMISS
`Case No. 4:21-cv-10001-HSG
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`Case 4:21-cv-10001-HSG Document 33 Filed 03/18/22 Page 10 of 32
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`statute of limitations; and it seeks forms of relief precluded as a matter of law. This is precisely the
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`kind of case that the Supreme Court warned would require the rigorous enforcement of Rule 12’s
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`pleading requirements. Defendants respectfully request that the Court follow that admonition and
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`dismiss Plaintiff’s Complaint with prejudice.
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`BACKGROUND
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`Defendant Apple Inc. is a California-based technology company that manufactures a host of
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`hardware devices, software, and services, including Macintosh desktop and notebook computers,
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`iPhone and iPad mobile devices, and the Safari web browser that comes preinstalled on Apple
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`devices. Compl. ¶¶ 50, 72. It provides cutting-edge electronics, software, and online services to
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`consumers throughout the world. Id. ¶ 72. Defendant Google, LLC—a subsidiary of Defendants
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`XXVI Holdings Inc. and Alphabet Inc.—has likewise risen from humble beginnings in Silicon
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`Valley to develop high-technology and software products used by consumers around the world,
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`including its world-famous Google Search engine. Id. ¶¶ 49, 81.
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`According to the Complaint,1 in 2005, Google entered into a contract with Apple to allow
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`users of Apple devices in the United States to easily access Google Search on Apple’s Safari web
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`browser. In particular, lacking its own search engine, Apple agreed to set Google Search as the
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`“out-of-the-box” default search service for its Safari web browser, id. ¶¶ 89-90, because Google
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`offered the highest quality results. Google also agreed to pay Apple a share of the advertising
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`revenues generated by searches performed on Google by Safari users. Id. ¶ 90. The deal did not
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`require Google to be the exclusive search engine available on Apple products or even the only search
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`engine promoted by Apple or its Safari web browser; consumers could easily change the default
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`1 Defendants acknowledge that, for purposes of this motion, the Court must take Plaintiff’s
`allegations as true, although the Court is not required to accept as true allegations that are merely
`conclusory, unwarranted deductions of fact, or unreasonable inferences. See, e.g., Digital Sun Corp.
`v. The Toro Co., 2011 WL 1044502, at *2 (N.D. Cal. Mar. 22, 2011). In fact, Defendants dispute
`many of Plaintiff’s baseless and unsupported allegations.
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`DEFENDANTS’ MEMORANDUM IN SUPPORT OF MOTION TO DISMISS
`Case No. 4:21-cv-10001-HSG
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`Case 4:21-cv-10001-HSG Document 33 Filed 03/18/22 Page 11 of 32
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`search provider on Safari. Id. ¶ 117. Apple always has been permitted to preload other search
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`engines on any of its devices, “bookmark” other search engines on Safari, and provide users the
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`ability to easily switch the Safari default search engine in the device’s “Settings.” Rival search
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`engines, and a variety of other search-enabled apps and voice assistants, also have been and continue
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`to be available for easy download onto an Apple device from Apple’s App Store. To conduct web
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`searches, users also are free to navigate to the web page of their preferred search engine via Safari
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`or numerous alternative browsers available on Apple devices. When examined carefully, Plaintiff’s
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`Complaint implicates only one of many ways that users could access a search engine on Apple
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`devices: the default search setting for the Safari web browser. Id. ¶ 89. And nowhere in this
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`Complaint does Plaintiff allege that the (written) commercial agreements that facilitated the
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`procompetitive promotion of Google Search to users of Apple devices contain any prohibition on
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`Apple independently developing its own search engine.
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`The existence of these commercial agreements, first entered into years before the launch of
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`the iPhone and iPad, has been public knowledge since their inception. The pre-set default search
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`engine, like other search engines integrated into Safari, has, of course, been visible to anyone using
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`the Safari web browser on an Apple device in the United States, and the fact that Google has made
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`payments to Apple under the agreement has been widely reported. Id. ¶¶ 31-39. Unsurprisingly,
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`Apple and Google executives have met numerous times over the years as part of the ongoing working
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`relationship created by these agreements. Id. ¶¶ 101, 103, 121, 124-25.
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`The Complaint alleges in conclusory fashion that Plaintiff, a crane operator certification
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`company, purchased search advertisements on Google, id. ¶ 48, and the prices paid were inflated by
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`an illegal agreement between Apple and Google. Id. ¶¶ 45, 48, 139. It alleges no facts about what
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`specific advertising it purchased, which keywords it bid on or how much it bid, or what other forms
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`DEFENDANTS’ MEMORANDUM IN SUPPORT OF MOTION TO DISMISS
`Case No. 4:21-cv-10001-HSG
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`Case 4:21-cv-10001-HSG Document 33 Filed 03/18/22 Page 12 of 32
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`of digital advertising may have been available besides search advertising on Google. In short,
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`Plaintiff offers no factual allegations to support a claim that it was injured at all.
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`According to the Complaint, Apple and Google have not only entered into the known,
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`vertical agreement—whereby Apple agreed to set Google as the default search engine for Safari—
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`but also a separate, clandestine horizontal agreement—whereby Apple agreed with Google not to
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`compete in providing search services. Id. ¶¶ 2-4, 21, 40, 94, 98, 104, 112-13, 115, 134. The
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`Complaint alleges that this non-compete agreement permitted Google to monopolize search engine
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`services (without alleging any antitrust relevant market whatsoever) and charge advertisers higher
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`fees, which Google then shared with Apple. Id. ¶¶ 6-7, 17, 43, 59, 97, 116. The parties supposedly
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`hatched this “conspiracy,” id. ¶ 66, during “secret” meetings between company executives at
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`Google’s headquarters, id. ¶ 101, a shopping mall café, id. ¶ 103, Steve Jobs’s living room, id. ¶ 103,
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`and public restaurants over dinner, id. ¶¶ 121, 124-25. The Complaint is silent as to any purported
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`connection between these meetings and an unlawful conspiracy, or why a factfinder could infer that
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`these meetings between executives concerned a secret non-compete agreement.
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`According to the Complaint, the conspiracy was allegedly engineered by former CEOs Steve
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`Jobs and Eric Schmidt. Id. ¶ 9. When they left Apple and Google, their replacements, Tim Cook
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`and Sundar Pichai, allegedly ratified and extended the alleged scheme, id. ¶ 10, and the conspiring
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`executives allegedly also informed the “board of directors of both Google and Apple” of their per
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`se illegal antitrust agreement. Id. ¶ 51.
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`On December 27, 2021, Plaintiff sued Defendants on behalf of itself and a proposed class of
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`“consumers and businesses who paid Google to place advertising on Google search in the United
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`States since January 1, 2005.” Id. ¶ 65. The Complaint contends that Defendants’ alleged non-
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`compete agreement is a per se violation of Section 1 of the Sherman Antitrust Act. Id. ¶¶ 135-43.
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`It also brings a claim under Sherman Act Section 2 for conspiracy to monopolize “the search
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`DEFENDANTS’ MEMORANDUM IN SUPPORT OF MOTION TO DISMISS
`Case No. 4:21-cv-10001-HSG
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`Case 4:21-cv-10001-HSG Document 33 Filed 03/18/22 Page 13 of 32
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`business.” Id. ¶ 147. Plaintiff requests treble damages, declarative relief, injunctive relief voiding
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`and prohibiting any profit-sharing and exclusivity agreements, disgorgement of profits and payments
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`exchanged, and the dismantling of both Apple and Google into s