Is Google’s $20 Billion Deal with Apple in Jeopardy?

A US judge’s ruling has declared Google’s operation of an illegal monopoly, jeopardising its $20 billion annual deal with Apple.

The agreement which makes Google the default search engine on Apple devices, is at risk of termination to prevent antitrust actions, according to Wall Street analysts. Such a move could decrease Apple’s profits by 4-6%.

Impact on Tech Giants 

The current agreement is set to run until at least September 2026, with an option for Apple to extend it by another two years. Analysts from Evercore ISI predict that the judge might rule either that Google can no longer pay for default placement or that companies like Apple must allow users to choose their search engine.

Following the news, Apple’s shares remained unchanged on Tuesday, while Alphabet’s shares experienced minimal change after a 4.5% drop on Monday.

Legal and Market Implications

Herbert Hovenkamp, a law professor at the University of Pennsylvania, cautioned that companies in dominant market positions must refrain from exclusive agreements and ensure buyer choice.

The remedy phase could extend over a lengthy period, with potential appeals reaching the US Court of Appeals for the District of Columbia Circuit and possibly the US Supreme Court, potentially continuing until 2026.