Apple Could See a Hit to Profit if Google Loses DOJ Search Lawsuit

Google and Apple’s long-standing partnership may face challenges due to the ongoing Department of Justice lawsuit against Google. The lawsuit alleges that Google engages in unfair competition in the internet search market. One aspect of the case focuses on the substantial annual payments Google makes to Apple, securing its position as the default search engine on iPhones and Safari web browsers. While the court’s ruling is not expected until 2024, the potential outcome could have implications for both companies.

According to Bernstein analyst Toni Sacconaghi, the court could strike down the Google-Apple relationship, which would likely be viewed negatively by investors. Sacconaghi estimates that Apple receives payments of $18 billion to $20 billion annually from Google, accounting for a significant portion of Apple’s operating profit. However, he believes that the economic impact on Apple in the long run would be manageable if the payments were terminated.

In the event of a severed partnership, Apple could explore alternative options. Sacconaghi suggests that Apple could partner with Microsoft’s Bing as the default search engine or even develop its own search engine. With its strong brand and emphasis on privacy, Apple could potentially capture a significant market share. Although Apple’s search engine may not initially match Google’s competitiveness, a transition to AI-powered search could reset consumer behavior and position Apple as a credible challenger over time.

The potential disruption caused by the lawsuit presents an opportunity for Apple to diversify its search engine options and potentially increase its revenue. While the outcome remains uncertain, Apple’s ability to adapt and innovate could lead to new avenues for growth. Both Google and Apple have played significant roles in shaping the digital landscape, and their continued evolution will undoubtedly contribute to a more vibrant and competitive market.

In conclusion, the ongoing lawsuit between the Department of Justice and Google may impact the Google-Apple partnership. However, Apple has the potential to explore new search engine partnerships or even develop its own, leveraging its brand and commitment to privacy. As the case unfolds, the resilience and adaptability of both companies will be key in navigating any potential changes.