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Google pays Apple up to $20B a year to be the default iPhone search engine, but that could change

The American Department of Justice is currently waging against Google over claims it monopolizes search and search advertising. Depending on the verdict, this lawsuit could impact Apple’s revenue and how users search on their iPhones.

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According to the DoJ, one of the main interests in the case is the Information Services Agreement between Apple and Google, which is being highlighted as an anticompetitive behavior. In a note seen by The Register, the financial analyst Bernstein believes this deal is now at risk.

“We believe there is a possibility that federal courts rule against Google and force it to terminate its search deal with Apple,” said Bernstein in the report sent to The Register. “We estimate that the ISA is worth $ 18B-20B in annual payments from Google to Apple, accounting for 14-16 percent of Apple’s annual operating profits.”

If Google loses its agreement with Apple, it might happen with other players, such as Samsung and Mozilla. According to the report, it’s important to note that this trial isn’t on Apple, as the Cupertino firm could, theoretically, partner with another search engine to be the default – or retain the agreement with Google outside the US.

For example, BGR has reported that Apple considered acquiring Microsoft Bing a few years ago and even met with DuckDuckGo’s CEO several times to discuss making his search engine the main option for private browsing.

The publication notes: “One more likely scenario is that Apple offers a choice screen. We note that Apple controls access to its installed base, which generates ~$60B + in advertising revenues, and accordingly, we believe that Apple would continue to command a commission (in the 25-30 percent range) for providing access to those search advertising revenues.”

That said, a verdict won’t come up until 2024, but no one expects the case to end so soon. BGR will keep following the latest steps on this trial.

Source


TECH GADGET

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