Apple’s (AAPL.O), opens new tab lucrative deal with Google (GOOGL.O), opens new tab could be under threat after a U.S. judge ruled that the Alphabet-owned search giant was operating an illegal monopoly.
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 on Tuesday.
Google pays Apple $20 billion annually, or about 36% of what it earns from search advertising made through the Safari browser, for the privilege, according to Morgan Stanley analysts.
To be sure, the “remedy” phase could be lengthy, followed by potential appeals to the U.S. Court of Appeals, the District of Columbia Circuit and the U.S. Supreme Court. The legal wrangling could play out into 2026.
AI TILT
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.
In a shift away from exclusive deals that would help Apple ward off regulatory scrutiny, the company has said it is also in talks with Google to add the Gemini chatbot and plans to add other AI models as well.
