The US Department of Justice is “very likely” to prohibit Google‘s long-standing search deal with Apple, according to Jefferies analysts. This decision could mark an end to the 22-year-long partnership, which has been in place since 2002 and is still continuing.
The $25 billion agreement, which makes Google the default search engine on iPhones, is estimated to account for 20% of Apple’s pretax profit and 6.3% of its total revenue.Jefferies analysts predict the ban could result in an 8% to 11% decline in Apple’s share prices.
What is significance of this Apple-Google partnership
At the centre of the largest antitrust trial in decades, Google’s practice of paying billions annually to secure prominent placement on devices has come under scrutiny. The DOJ argues that these deals stifle competition and innovation, while Google maintains that its dominance stems from consumer preference.
Despite the potential setback, the full impact may not be immediate. Jefferies estimates a final court outcome could take three to eight years, including appeals. This timeline could allow Apple to develop alternative strategies, such as exploring its own search engine or deepening AI integrations.
The case’s outcome could have far-reaching implications for the tech industry. It may force Apple to reconsider its search strategy and potentially open doors for competitors like Microsoft. The decision could also fundamentally alter Google’s ability to maintain its search engine market dominance through financial agreements.