Google is paying billions of dollars each year to Apple to enable its search engine by default on iPhones, according to Jefferies analysts, following a crushing defeat at the hands of the Justice Department in a landmark antitrust case. It is “highly likely” that payment of this amount will be prohibited.
Judge Amit Mehta ruled in August that Google has an illegal monopoly over online search, specifically citing the company’s habit of cutting default status checks, including $20 billion to Apple in 2022 alone. They accused it of anti-competitive tactics. The judge is expected to announce a remedy by next summer.
“One very likely remedy would be to prohibit GOOG from paying AAPL to be its iPhone-only search engine,” Jefferies analysts said in a note to clients on Wednesday.
Jeffries estimated that Apple will receive $25 billion in revenue from Google in fiscal 2024, equivalent to 20% of the iPhone maker’s pre-tax profits.
Still, any impact on Google and Apple’s revenues will probably be far in the future. Google has already announced it is appealing the initial ruling in Mehta’s search case, but CEO Sundar Pichai has warned that the legal battle will take “years” to resolve. .
“Based on precedent, a final settlement could take three to eight years,” Jefferies analysts said.
“Furthermore, while an exclusive deal is unlikely to be granted, as long as it is not an exclusive deal and AAPL allows users to choose other search engines, the Department of Justice will agree that GOOG will have a revenue-sharing agreement with AAPL. “It may not be possible to prevent them from tying the knot,” the memo added.
The Justice Department said in a filing last week that it is considering asking Mr. Mehta to order the dismantling of the Google empire through the sale of assets such as the Chrome browser, the Google Play app store and the Android operating system.
A judge could force Google to suspend payments to smartphone makers such as Apple and carriers such as AT&T, and could require the company to share related search data, indexes and models with rivals. be.
Google pushed back, calling the Justice Department’s redress framework “radical” and arguing that the proposal “goes far beyond the specific legal issues of this case.”
“Government overreach in a fast-moving industry can have unintended negative impacts on American innovation and American consumers,” Lee Ann Mulholland, Google’s vice president of regulation, said in a blog post. Ta. “We look forward to making our case in court.”
