Case 5:22-cv-02499-EJD Document 25 Filed 06/24/22 Page 1 of 35
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`John E. Schmidtlein (SBN 163520)
`Carol J. Pruski (SBN 275953)
`WILLIAMS & CONNOLLY LLP
`680 Maine Avenue, S.W.
`Washington, DC 20024
`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 (admitted pro hac vice)
`Julia K. York (admitted pro hac vice)
`SKADDEN, ARPS, SLATE, MEAGHER &
`FLOM LLP
`1440 New York Avenue, N.W.
`Washington, DC 20005-2111
`Telephone: (202) 371-7000
`Facsimile: (202) 393-5760
`Email: steven.sunshine@skadden.com
`Email: julia.york@skadden.com
`
`Attorneys for Defendants Apple Inc. and Tim
`Cook
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`
`
`MARY KATHERINE ARCELL, et al.,
`Plaintiffs,
`
`v.
`
`GOOGLE LLC, ALPHABET INC., XXVI
`HOLDINGS INC., APPLE INC., TIM
`COOK, SUNDAR PICHAI, and ERIC
`SCHMIDT,
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`Defendants.
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN JOSE DIVISION
`
`
`Case No. 5:22-cv-2499-EJD
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`DEFENDANTS’ NOTICE OF MOTION
`AND MOTION TO DISMISS PLAINTIFFS’
`COMPLAINT; MEMORANDUM OF
`POINTS AND AUTHORITIES IN
`SUPPORT THEREOF
`Hearing Date: November 3, 2022
`Time: 9:00 a.m.
`Place: Courtroom 4
`Judge: Hon. Edward J. Davila
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`Case 5:22-cv-02499-EJD Document 25 Filed 06/24/22 Page 2 of 35
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`NOTICE OF MOTION AND MOTION
`TO THE COURT, ALL PARTIES, AND THEIR ATTORNEYS OF RECORD:
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`PLEASE TAKE NOTICE that on November 3, 2022, at 9:00 a.m., or as soon thereafter
`as this matter may be heard, in Courtroom 4 of this Court, located on the 5th Floor of the United
`States Courthouse, 280 South 1st Street, San Jose, California, 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 Plaintiffs’ 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.
`
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`DATED: June 24, 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
`680 Maine Avenue, S.W.
`Washington, DC 20024
`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 (admitted pro hac vice)
`Julia K. York (admitted pro hac vice)
`SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
`1440 New York Avenue, N.W.
`Washington, DC 20005-2111
`
`Telephone: (202) 371-7000
`
`Facsimile: (202) 393-5760
`Email:
` steven.sunshine@skadden.com
`Email:
` julia.york@skadden.com
`
`
`
`
`
`
`Attorneys for Defendants Apple Inc. and Tim Cook
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`DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS
`Case No. 5:22-cv-2499-EJD
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`Case 5:22-cv-02499-EJD Document 25 Filed 06/24/22 Page 3 of 35
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`TABLE OF CONTENTS
`INTRODUCTION ...........................................................................................................................1
`BACKGROUND .............................................................................................................................2
`LEGAL STANDARD ......................................................................................................................5
`ARGUMENT ...................................................................................................................................6
`I.
`The Complaint Fails To State a Claim Under Sherman Act Section 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
`Because It Contains No Plausible Factual Allegations That Could Be
`Viewed as Direct Evidence of an Agreement Not To Compete ..............................7
`The Complaint Fails To Plead Circumstantial Evidence of a Horizontal
`Conspiracy Because Plaintiffs Fail To Plead “Parallel Conduct” or “Plus
`Factors” ....................................................................................................................8
`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 ........................................................................................................................11
`A.
`Plaintiffs Do Not Allege Facts Plausibly Suggesting the Existence of a
`Conspiracy Under Section 2 Because They Fail To Plead a Conspiracy
`Under Section 1......................................................................................................12
`Plaintiffs Do Not Adequately Allege a Relevant Market Because the
`Relevant Market is Unclear and Not Supported by Factual Allegations ...............13
`Plaintiffs Fail To Allege that Apple Possessed the Requisite Specific Intent
`Because the Complaint is Devoid of Allegations that Raise an Inference of
`Specific Intent ........................................................................................................14
`The Complaint Fails To Allege Facts Sufficient To Establish Antitrust Standing
`Because It Fails To Satisfy Any of the Antitrust Standing Factors ...................................15
`The Statute of Limitations and Doctrine of Laches Preclude Plaintiffs’ Claims ...............19
`A.
`Plaintiffs Do Not Allege a Continuing Violation ..................................................20
`B.
`Plaintiffs’ Allegations of Fraudulent Concealment Are Insufficient .....................22
`The Court Should Dismiss the Complaint’s Requests for Public Injunctive Relief,
`Disgorgement, and Divestiture ..........................................................................................24
`CONCLUSION ..............................................................................................................................25
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`II.
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`III.
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`IV.
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`V.
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`B.
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`B.
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`C.
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`DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS
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`Case 5:22-cv-02499-EJD Document 25 Filed 06/24/22 Page 4 of 35
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`TABLE OF AUTHORITIES
`
`CASES
`
`Am. Ad Mgmt., Inc. v. Gen. Tel. Co. of Cal., 190 F.3d 1051 (9th Cir. 1999) ..........................15, 17
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`Aquilina v. Certain Underwriters at Lloyd’s, 407 F. Supp. 3d 978 (D. Haw. 2019).....................11
`
`Arcsoft, Inc. v. Cyberlink Corp., 153 F. Supp. 3d 1057 (N.D. Cal. 2015) .....................................25
`
`Ashcroft v. Iqbal, 556 U.S. 662 (2009) ..................................................................................5, 6, 23
`
`Associated Gen. Contractors v. Cal. State Council of Carpenters, 459 U.S. 519 (1983) .......17, 18
`
`Aurora Enters., Inc. v. NBC, 688 F.2d 689 (9th Cir. 1982) ...........................................................19
`
`Auto Sound Inc. v. Audiovox Elecs. Corp., 2012 WL 12892938 (C.D. Cal. Dec. 3, 2012) .............9
`
`Bay Area Surgical Mgmt. LLC v. Aetna Life Ins. Co., 166 F. Supp. 3d 988 (N.D. Cal. 2015) .....22
`
`Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ..............................................................6, 8, 9, 10
`
`Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297 (3d Cir. 2007) ................................................25
`
`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) ........................................................6
`
`California Crane School, Inc. v. Google LLC et al., 4:21-cv-10001-HSG (N.D. Cal.) ..................5
`
`California v. Am. Stores Co., 495 U.S. 271 (1990) .......................................................................24
`
`Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104 (1986) .........................................................17
`
`Chandler v. Phoenix Servs., 2020 WL 1848047 (N.D. Tex. Apr. 13, 2020) .................................22
`
`City of Oakland v. Oakland Raiders, 20 F.4th 441 (9th Cir. 2021) .........................................17, 18
`
`Coal. for ICANN Transparency Inc. v. VeriSign, Inc.,
`771 F. Supp. 2d 1195 (N.D. Cal. 2011) ...................................................................................24
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`Conmar Corp. v. Mitsui & Co. (U.S.A.), 858 F.2d 499 (9th Cir. 1988) ........................................23
`
`Coronavirus Rep. v. Apple Inc., 2021 WL 5936910 (N.D. Cal. Nov. 30, 2021) ...........................13
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`Destfino v. Reiswig, 630 F.3d 952 (9th Cir. 2011) ........................................................................11
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`Digital Sun Corp. v. Toro Co., 2011 WL 1044502 (N.D. Cal. Mar. 22, 2011) ...............................3
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`Eagle v. Star-Kist Foods, Inc., 812 F.2d 538 (9th Cir. 1987) ........................................................18
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`DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS
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`Case 5:22-cv-02499-EJD Document 25 Filed 06/24/22 Page 5 of 35
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`Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d 990 (9th Cir. 2014) .....................10
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`Feitelson v. Google Inc., 80 F. Supp. 3d 1019 (N.D. Cal. 2015)...................................................16
`
`Garrison v. Oracle Corp., 159 F. Supp. 3d 1044 (N.D. Cal. 2016) ..................................20, 21, 22
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`Garrison v. Oracle Corp., 2015 WL 1849517 (N.D. Cal. Apr. 22, 2015) ....................................23
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`Granddad Bread, Inc. v. Cont’l Baking Co., 612 F.2d 1105 (9th Cir. 1979) ................................12
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`Hennegan v. Pacifico Creative Serv., Inc., 787 F.2d 1299 (9th Cir.1986) ....................................20
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`Hexcel Corp. v. Ineos Polymers, Inc., 681 F.3d 1055 (9th Cir. 2012) ..........................................22
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`Hicks v. PGA Tour, Inc., 897 F.3d 1109 (9th Cir. 2018) ...............................................................13
`
`Hu Honua Bioenergy, LLC v. Hawaiian Elec. Indus., Inc.,
`2018 WL 5891743 (D. Haw. Nov. 9, 2018) ............................................................................15
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`Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) .........................................................................19
`
`In re Cal. Bail Bond Antitrust Litig., 511 F. Supp. 3d 1031 (N.D. Cal. 2021) ..............................11
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`In re Cal. Title Ins. Antitrust Litig., 2009 WL 1458025 (N.D. Cal. May 21, 2009) ......................10
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`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
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`In re Flat Glass Antitrust Litig., 385 F.3d 350 (3d Cir. 2004).........................................................9
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`In re Generic Pharms. Pricing Antitrust Litig., 2022 WL 2047964 (E.D. Pa. June 7, 2022) .......18
`
`In re Graphics Processing Units Antitrust Litig.,
`2007 WL 2127577 (N.D. Cal. July 24, 2007) ..........................................................................11
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`In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651 (7th Cir. 2002) .......................7, 10
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`In re Ins. Brokerage Antitrust Litig., 618 F.3d 300 (3d Cir. 2010)..................................................8
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`In re Multidistrict Vehicle Air Pollution, 591 F.2d 68 (9th Cir. 1979) ..........................................20
`
`In re Musical Instruments & Equip. Antitrust Litig., 798 F.3d 1186 (9th Cir. 2015) ..............7, 8, 9
`
`In re Nat’l Ass’n of Music Merchs., Musical Instruments & Equip. Antitrust Litig.,
`2012 WL 3637291 (S.D. Cal. Aug. 20, 2012) .........................................................................10
`
`In re Online DVD Rental Antitrust Litig., 2011 WL 1629663 (N.D. Cal. Apr. 29, 2011) ............17
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`Jacobs v. Tempur-Pedic Int’l, Inc., 626 F.3d 1327 (11th Cir. 2010) .......................................12, 13
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`DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS
`Case No. 5:22-cv-2499-EJD
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`Case 5:22-cv-02499-EJD Document 25 Filed 06/24/22 Page 6 of 35
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`Jacobsen v. Katzer, 2006 WL 3000473 (N.D. Cal. Oct. 20, 2006) ...............................................17
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`Kelsey K. v. NFL Enters., LLC, 254 F. Supp. 3d 1140 (N.D. Cal. 2017) ........................................8
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`Kendall v. Visa U.S.A., Inc., 518 F.3d 1042 (9th Cir. 2008) ...........................................6, 7, 10, 25
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`Kloth v. Microsoft Corp., 444 F.3d 312 (4th Cir. 2006) ................................................................18
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`Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979 (9th Cir. 2000) .....................................17
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`Lee v. Kitchables Prods., 2021 WL 3173253 (N.D. Cal. July 27, 2021) ......................................24
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`Litovich v. Bank of Am. Corp., 2021 WL 4952034 (S.D.N.Y. Oct. 25, 2021) ..............................22
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`Maguca v. Aurora Loan Servs., 2009 WL 3467750 (C.D. Cal. Oct. 28, 2009) ............................10
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`Mayor & City Council of Baltimore v. Citigroup, Inc., 709 F.3d 129 (2d Cir. 2013) .....................7
`
`McCabe Hamilton & Renny Co. v. Matson Navigation Co.,
`2008 WL 2233740 (D. Haw. Apr. 9, 2008) .............................................................................15
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`Murphy Tugboat Co. v. Shipowners & Merchs. Towboat Co., Ltd.,
`467 F. Supp. 841 (N.D. Cal. 1979) ..........................................................................................12
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`N. Cheyenne Tribe v. Norton, 503 F.3d 836 (9th Cir. 2007) .........................................................24
`
`Name.Space, Inc. v. Internet Corp. for Assigned Names & Numbers,
`795 F.3d 1124 (9th Cir. 2015) .................................................................................................10
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`Netafim Irrigation, Inc. v. Jain Irrigation, Inc., 562 F. Supp. 3d 1073 (E.D. Cal. 2021) .............16
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`Neubronner v. Milken, 6 F.3d 666 (9th Cir. 1993) ........................................................................23
`
`NorthBay Healthcare Grp., Inc. v. Kaiser Found. Health Plan, Inc.,
`2017 WL 6059299 (N.D. Cal. Dec. 7, 2017) ...........................................................................12
`
`NorthBay Healthcare Grp., Inc. v. Kaiser Found. Health Plan, Inc.,
`305 F. Supp. 3d 1065 (N.D. Cal. 2018) ...................................................................................16
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`Pac. Steel Grp. v. Com. Metals Co., 2021 WL 2037961 (N.D. Cal. May 21, 2021) .......................9
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`Pace Indus., Inc. v. Three Phoenix Co., 813 F.2d 234 (9th Cir. 1987) ..........................................20
`
`Paladin Assocs. v. Montana Power Co., 328 F.3d 1145 (9th Cir. 2003) .......................................12
`
`Park Irmat Drug Corp. v. Express Scripts Holding Co., 911 F.3d 505 (8th Cir. 2018) ..................8
`
`Peterson v. Sutter Med. Found., 2022 WL 316677 (N.D. Cal. Feb. 2, 2022) ...............................23
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`Pool Water Prods. v. Olin Corp., 258 F.3d 1024 (9th Cir. 2001) .................................................15
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`DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS
`Case No. 5:22-cv-2499-EJD
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`Prime Healthcare Servs., Inc. v. SEIU, 2013 WL 3873074 (S.D. Cal. July 25, 2013) .................12
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`Reveal Chat Holdco LLC v. Facebook, Inc., 2021 WL 1615349 (N.D. Cal. Apr. 26, 2021) ........22
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`Reveal Chat Holdco, LLC v. Facebook, Inc., 471 F. Supp. 3d 981 (N.D. Cal. 2020) ...................16
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`Rogers v. Lyft, Inc., 452 F. Supp. 3d 904 (N.D. Cal. 2020) ...........................................................24
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`Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729 (9th Cir. 1987) ..................11, 12, 14, 15
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`Ryan v. Microsoft Corp., 147 F. Supp. 3d 868 (N.D. Cal. 2015) ............................................20, 21
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`Siegler v. Sorrento Therapeutics, Inc., 2019 WL 3532294 (S.D. Cal. Aug. 2, 2019) ...................13
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`Somers v. Apple, Inc., 729 F.3d 953 (9th Cir. 2013) .....................................................................15
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`Space Expl. Technologies Corp. v. Boeing Co.,
`2006 WL 7136649 (C.D. Cal. May 12, 2006) ...................................................................16, 18
`
`Standfacts Credit Servs., Inc. v. Experian Info. Sols., Inc.,
`405 F. Supp. 2d 1141 (C.D. Cal. 2005) .............................................................................12, 14
`
`Stanislaus Food Prod. Co. v. USS-POSCO Indus.,
`2011 WL 2678879 (E.D. Cal. July 7, 2011) ......................................................................12, 14
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`Stanislaus Food Prod. Co. v. USS-POSCO Indus., 803 F.3d 1084 (9th Cir. 2015) ........................9
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`Sun Microsystems Inc. v. Hynix Semiconductor Inc., 608 F. Supp. 2d 1166 (N.D. Cal. 2009).......7
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`Taleff v. Southwest Airlines Co., 828 F. Supp. 2d 1118 (N.D. Cal. 2011) ....................................25
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`Thorman v. Am. Seafoods Co., 421 F.3d 1090 (9th Cir. 2005)......................................................23
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`Toscano v. PGA Tour, Inc., 201 F. Supp. 2d 1106 (E.D. Cal. 2002) ......................................17, 19
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`TSI USA LLC v. Uber Techs., 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) ...........................9
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`Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) ....................................................23
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`Zenith Radio Corp. v. Hazeltine Rsch., Inc., 401 U.S. 321 (1971) ................................................20
`
`STATUTES
`15 U.S.C. § 15 ........................................................................................................................ passim
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`15 U.S.C. § 15b ..............................................................................................................................19
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`15 U.S.C. § 26 ................................................................................................................................24
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`DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS
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`Case 5:22-cv-02499-EJD Document 25 Filed 06/24/22 Page 8 of 35
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`FEDERAL RULES
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`Federal Rule of Civil Procedure 8(a) .............................................................................................11
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`Federal Rule of Civil Procedure 9(b) .............................................................................................23
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`Federal Rule of Civil Procedure 12(b)(6) ............................................................................5, 13, 24
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`OTHER AUTHORITIES
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`DOJ-FTC Antitrust Guidelines for the Licensing of Intellectual Property,
`2017 WL 282889 (Jan. 12, 2017) ..............................................................................................9
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`DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS
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`Case 5:22-cv-02499-EJD Document 25 Filed 06/24/22 Page 9 of 35
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`MEMORANDUM OF POINTS AND AUTHORITIES
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`INTRODUCTION
`Google and Apple provide complementary products and services that facilitate internet
`search: Google offers an internet search engine, and Apple offers an internet browser and a wide
`range of internet-accessible devices. As is commonplace among companies that offer
`complementary products and services, Google and Apple integrated their offerings to create
`efficiencies and enrich the user experience. Pursuant to publicly reported agreements, known as
`Information Services Agreements, Apple has agreed to set Google as the default search provider
`in its Safari web browser in the United States because Google offers the highest quality search
`results. The agreements do not prevent Apple from integrating alternative search engines into
`Safari. In fact, Safari users in the United States can choose among Microsoft’s Bing, Yahoo!,
`DuckDuckGo, and Ecosia. Pursuant to the agreements, Google has agreed to pay Apple a share of
`the advertising revenues generated by searches performed on Google by Safari users, another
`standard practice for search engines integrated via a browser’s search field.
`Although these agreements between search engine provider and web browser developer
`have been public knowledge for over 15 years (and have been a common form of agreement
`between search providers and web browser companies during this time), Plaintiffs try to spin this
`vertical business relationship into a per se unlawful horizontal conspiracy whereby Apple also
`agreed not to compete with Google. But no such horizontal agreement exists, either as part of the
`Information Services Agreements or elsewhere, and Plaintiffs’ Complaint does not allege facts
`plausibly suggesting otherwise. Stripped of its repetitive conclusory assertions of conspiracy, the
`Complaint contains nothing more than a recitation of benign, public facts that do not show an
`unlawful conspiracy as a matter of law. Because these allegations cannot support the per se
`horizontal Sherman Act violation or the conspiracy to monopolize asserted in this case, the
`Complaint fails to state a claim for relief and should be dismissed with prejudice.
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`Moreover, even if the Complaint had set out viable claims, Plaintiffs lack antitrust standing
`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, Plaintiffs endured a lower quality search experience and suffered
`vague monetary and privacy harms. But Plaintiffs’ theory of alleged injury requires at least five
`speculative steps to even loosely connect the dots between the challenged restraint and the injury
`claimed. An injury would exist only if—in the absence of the (non-existent) non-compete
`agreement—Apple developed its own competing search technology and launched a search engine
`product for use by consumers, used this new search product as the default search provider for the
`Safari web browser, captured a significant share of the search-engine market, and thereby spurred
`participants in the market to offer better, more innovative, and cheaper search results than the free
`and instantaneous results they already provide. This attenuated theory, unsupported by any factual
`allegations, cannot satisfy the strict antitrust standing factors.
`
`Plaintiffs’ baseless Complaint also fails because although Plaintiffs rely on public
`agreements allegedly dating back to 2005, they have no basis to toll the applicable four-year statute
`of limitations, so their claims are time-barred. What is more, Plaintiffs seek disgorgement and
`injunctive relief on behalf of the greater public—remedies categorically unavailable here—as well
`as the extreme remedy of divestiture of Google and Apple into smaller companies.
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`Put simply, Plaintiffs overreach at every step. They assert claims that find no support in
`the alleged facts; fail to satisfy antitrust standing requirements; raise claims barred by the statute
`of limitations; and seek forms of relief precluded as a matter of law. This is precisely the kind of
`case that the Supreme Court warned would require the rigorous enforcement of Rule 12’s pleading
`requirements. Defendants respectfully request that the Court follow that admonition and dismiss
`Plaintiffs’ Complaint with prejudice.
`
`BACKGROUND
`Defendant Apple Inc. is a California-based technology company that manufactures a host of
`hardware devices, software, and services, including Macintosh desktop and notebook computers,
`iPhone and iPad mobile devices, and the Safari web browser that comes preinstalled on Apple
`devices. Compl. ¶¶ 51, 71, ECF. No. 1. It provides cutting-edge electronics, software, and online
`services to consumers throughout the world. Id. ¶ 71. Defendant Google LLC—a subsidiary of
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`Defendants XXVI Holdings Inc. and Alphabet Inc.—has likewise risen from humble beginnings in
`Silicon Valley to develop high-technology and software products used by consumers around the
`world, including its world-famous Google Search engine. Id. ¶¶ 50, 80.
`According to the Complaint,1 in 2005, Google entered into a contract with Apple to allow
`users of Apple devices in the United States to easily access Google Search on Apple’s Safari web
`browser. In particular, lacking its own search engine, Apple agreed to set Google Search as the
`“out-of-the-box” default search service for its Safari web browser, id. ¶ 88, because Google offered
`the highest quality results. Google also agreed to pay Apple a share of the advertising revenues
`generated by searches performed on Google by Safari users. Id. ¶ 89. The deal did not require
`Google to be the exclusive search engine available on Apple products or even the only search engine
`promoted by Apple or its Safari web browser; consumers could easily change the default search
`provider on Safari. Id. ¶ 116. Apple always has been permitted to preload other search engines on
`any of its devices, “bookmark” other search engines on Safari, and provide users the ability to easily
`switch the Safari default search engine in the device’s “Settings.” Rival search engines, and a variety
`of other search-enabled apps and voice assistants, also have been and continue to be available for
`easy free download onto an Apple device from Apple’s App Store. To conduct web searches, users
`also are free to navigate to the web page of their preferred search engine via Safari or numerous
`alternative browsers available on Apple devices. When examined carefully, Plaintiffs’ Complaint
`implicates only one of many ways that users could access a search engine on Apple devices: the
`default search setting for the Safari web browser. Id. ¶ 88. And nowhere in this Complaint do
`Plaintiffs allege that the (written) commercial agreements that facilitated the procompetitive
`promotion of Google Search to users of Apple devices contain any prohibition on Apple
`independently developing its own search engine.
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`1 Defendants acknowledge that, for purposes of this motion, the Court must take Plaintiffs’
`allegations as true, although it need not accept as true allegations that are merely conclusory,
`unwarranted deductions of fact, or unreasonable inferences. See, e.g., Digital Sun Corp. v. Toro Co.,
`2011 WL 1044502, at *2 (N.D. Cal. Mar. 22, 2011). In fact, Defendants dispute many of Plaintiffs’
`baseless and unsupported allegations.
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`Case 5:22-cv-02499-EJD Document 25 Filed 06/24/22 Page 12 of 35
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`The existence of these commercial agreements, first entered into years before the launch of
`the iPhone and iPad, has been public knowledge since their inception. The pre-set default search
`engine, like other search engines integrated into Safari, has, of course, been visible to anyone using
`the Safari web browser on an Apple device in the United States, and the fact that Google has made
`payments to Apple under the agreement has been widely reported. Id. ¶¶ 31-39. Unsurprisingly,
`Apple and Google executives have met numerous times over the years as part of the ongoing working
`relationship created by these agreements. Id. ¶¶ 100, 102, 120, 124-25.
`According to the Complaint, Apple and Google have not only entered into the known,
`vertical agreement—whereby Apple agreed to set Google as the default search engine for Safari—
`but also a separate, clandestine horizontal agreement—whereby Apple agreed with Google not to
`compete in providing search services. Id. ¶¶ 2-4, 23, 40, 93, 97, 103, 111-12, 114, 134. The
`Complaint alleges that this non-compete agreement permitted Google to monopolize search engine
`services (without alleging any antitrust relevant market whatsoever) and charge advertisers higher
`fees, which Google then shared with Apple. Id. ¶¶ 6-7, 17, 43, 60, 96, 115. The parties supposedly
`hatched this “conspiracy,” id. ¶ 29, during “secret” meetings between company executives at
`Google’s headquarters, id. ¶ 100, a shopping mall café, id. ¶ 102, Steve Jobs’s living room, id., and
`public restaurants over dinner, id. ¶¶ 120, 124-25. The Complaint is silent as to any purported
`connection between these meetings and an unlawful conspiracy, or why a factfinder could infer that
`these alleged meetings between executives concerned a secret non-compete agreement.
`The Complaint alleges the conspiracy was engineered by former CEOs Steve Jobs and Eric
`Schmidt. Id. ¶ 9. When they left Apple and Google, their replacements, Tim Cook and Sundar
`Pichai, allegedly ratified and extended the alleged scheme, id. ¶ 10, and the conspiring executives
`allegedly also informed the “board of directors of both Google and Apple” of their per se illegal
`antitrust agreement. Id. ¶ 52.
`On December 27, 2021, California Crane School, Inc.—a crane operator certification
`company—sued Defendants on behalf of itself and a proposed class of “consumers and businesses
`who paid Google to place advertising on Google search in the United States since January 1, 2005.”
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`See Compl. ¶ 65, California Crane School, Inc. v. Google LLC et al., 4:21-cv-10001-HSG (N.D.
`Cal.), ECF No. 1. Defendants filed Motions to Compel Arbitration, Stay Litigation Pending
`Arbitration, and Stay Discovery, id., ECF Nos. 32, 34-35, which inter alia noted that California
`Crane had signed an agreement to arbitrate all disputes with Google, Google’s parent companies,
`and its executives. Several weeks later, counsel for California Crane filed the Complaint in this case.
`The Complaint is substantially the same as the Crane complaint. Indeed, it proceeds against
`the exact same Defendants and asserts that Defendants’ alleged non-compete agreement is a per se
`violation of Section 1 of the Sherman Antitrust Act. Compl. ¶¶ 135-47, ECF No. 1. Plaintiffs also
`bring an identical claim under Sherman Act Section 2