Washington, D.C. — The American Economic Liberties Project sent a letter today to the Securities and Exchange Commission to request that they investigate Apple Inc. to determine whether the company has violated the antifraud provisions of Section 17(a)(2) and (3) of the Securities Act of 1933, as well as certain reporting provisions of the federal securities laws. The letter centers around Apple’s non-disclosure of its longstanding contract with Google Inc., through which Google pays Apple large sums annually for Google to retain its status as the default search engine on Apple devices. This agreement has endured for 18 years and solidifies Google as the default search engine on Apple’s hardware products. Crucially, the risk that Google could terminate the agreement for a number of reasons, now or at some point in the future, presents an ongoing and material risk to Apple’s earnings.

“Apple’s contract with Google may represent 19% of their profits, which Apple itself calls ‘market-moving,’” said Krista Brown, Senior Policy Analyst at the American Economic Liberties Project. “The SEC has rules in place on disclosing material information for investors for a reason and they need to look into this.”

This week Apple filed a petition in the United States of America v. Google trial to keep certain documents and examination details sealed. The company’s argument for such confidentiality is as follows, “DOJ’s insistence on questioning Mr. Cue about this information in open court represents a substantial risk of revealing non-public, market-moving information pertaining to Apple, not a party to the DOJ’s suit, and affecting Apple’s ongoing business relations and contract negotiations.” If the information is market-moving, it fits the definition of a material risk, and in accordance with SEC rules, must be disclosed to Apple’s shareholders and the investing public. The omission of this material information may have led investors to make decisions based on an incomplete or inaccurate understanding of Apple’s financials and diversified revenue sources.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.