Google’s antitrust ruling may cost Apple $20 bln deal

Google pays Apple 20$ billion each year, which amounts to about 36% of the revenue generated from search advertising through the Safari browser, according to the American investment company Morgan Stanley. As such, with Google’s recent antitrust ruling, a deal being undone between the two tech giants could make Apple lose around 4-6% of its profit, as per analysts.
A potential remedy for Google to avoid antitrust actions could involve terminating the agreement, which makes its search engine a default on Apple devices, Wall Street analysts said yesterday.
The pact between Apple and Google runs until at least September 2026 and Apple has the right to unilaterally extend it for another two years, according to media reports in May that cited a document filed by the Department of Justice in the antitrust case.
“The most likely outcome now is the judge rules Google must no longer pay for default placement or that companies like Apple must proactively prompt users to select their search engine rather than setting a default and allowing consumers to make changes in settings if they wish,” Evercore ISI analysts said.
Apple’s shares were trading flat on Tuesday, underperforming a recovery in the broader market after Monday’s global selloff. Alphabet was little changed, after falling 4.5% in the previous session.
“The message here is that if you’ve got a dominant market position with a product, you’d better avoid the use of exclusive agreements and make sure any agreement you make gives the buyer free choice to substitute away,” said Herbert Hovenkamp, a professor of law at the University of Pennsylvania.
Still, if the tie-up is scrapped, Apple will have several options including offering customers alternatives such as Microsoft Bing to customers, or potentially a new search product powered by OpenAI.
Analysts agree that the ruling will speed up Apple’s move towards AI-powered search services. It recently announced that it would bring OpenAI’s ChatGPT chatbot to its devices.
Apple has also said it is in talks with Google to add the Gemini chatbot and plans to add other AI models as well. The company is also revamping Siri with AI technology, giving it more control to handle tasks that had proven tricky in the past such as writing emails and interacting with messages.