A landmark ruling in a Google antitrust case on Monday threatens one of the longest-running partnerships in tech, potentially costing Apple billions of dollars. Despite this, Apple has stated that there is no meaningful alternative to Google’s search engine.
The case revolves around an exclusive agreement between Apple and Google, in place since 2002, making Google Search the default search engine on all Apple devices. This deal has generated billions in revenue for both companies, with Google paying Apple a share of its search advertising revenue. In 2022 alone, Google paid Apple $20 billion, according to the Financial Times, citing court documents.
District Judge Amit Mehta found Google guilty of antitrust violations, putting the partnership in question. JPMorgan analysts foresee “uncomfortable alternatives” for Apple, including potential revenue-sharing deals with Microsoft’s Bing, which “would be less beneficial to Apple given Google’s superior ad monetization.”
Possible Outcomes for Apple
Judge Mehta also raised the question of whether Apple could develop its own search engine. However, a 2018 internal study indicated that even if Apple retained 80% of searches, it would still lose $12 billion in revenue over the first five years without Google. Additionally, former Google executive John Giannandrea, now at Apple, warned of a “significant risk” that Apple’s search engine would be unprofitable and fail to meet user needs as effectively as Google.
While Google plans to appeal, analysts believe the chances of a successful review are slim. Depending on the final ruling, Apple may have to settle for a much less favorable deal with Microsoft’s Bing or lose the ability to set a default search engine altogether, according to independent analyst Eric Seufert.
Apple is not the only company affected. Court documents reveal that Google paid Mozilla over $400 million in 2021 to set Google Search as the default in its browser, accounting for about 80% of Mozilla’s operating budget.
The Future of Search and AI Integration
The search market is undergoing significant transformation with the rise of generative AI, adds NIX Solutions. Apple has already announced a partnership with OpenAI, allowing users to send search queries to ChatGPT. The company is also working on improving its Siri voice assistant with its own AI technology.
Despite these advancements, traditional search continues to grow. Search ad spending in the U.S. is projected to rise by an average of 10% annually, reaching $184 billion by 2028. We’ll keep you updated as the situation develops.