Apple’s lucrative agreement with Google is under threat following a U.S. judge’s ruling that Google’s search engine operates as an illegal monopoly. The decision has cast uncertainty over the future of the partnership that sees Google paying Apple approximately $20 billion each year for being the default search engine on Apple devices.
Wall Street analysts suggest that in an effort to mitigate antitrust repercussions, Google might opt to terminate its agreement with Apple. According to a report by Morgan Stanley, the payment from Google accounts for about 36 percent of its search advertising revenue generated through Apple’s Safari browser.
Should the agreement be dissolved, analysts estimate that Apple could face a reduction in profits by four to six percent. The current contract between the tech giants is set to continue until at least September 2026, with options for Apple to extend it further.
Furthermore, the court might mandate Google to cease payments for default search placement or compel companies like Apple to actively ask users to choose their preferred search engine, rather than defaulting to Google without user input.
Legal experts believe this ruling could have wider implications for corporations holding dominant market positions. Herbert Hovenkamp, a professor at the University of Pennsylvania, noted that the decision serves as a caution against exclusive agreements that limit consumer choice.
The outcome of this case could significantly impact the landscape of internet search and advertising, potentially reshaping how tech companies collaborate and compete in the global market.
Reference(s):
cgtn.com
