Apple will cut revenues by $12.5 billion as Google is considering Google’s anti-trust relief.
- apple For DOJ forces, they could lose revenues up to $12.5 billion Google In According to JPMorgan, change the way you pay for the default search placement. DOJ is considering a bailout in the antitrust case of Google’s search business, and a decision is expected in August. Apple is not directly involved in the incident, but its favorable deal with Google is at stake. JPMorgan expects a moderate relief, but estimates Google’s worst exposure could reach $18 billion.
According to a new memo from JPMorgan, if a federal judge forces Google to change the way Google pays for its search engine contracts, Apple could lose up to $12.5 billion in annual revenue.
The Department of Justice calls for corrective action to be imposed after an antitrust lawsuit against Google. The groundbreaking case of DOJ, concluded in 2023, has become the default search engine, accusing Google of maintaining its illegal monopoly by paying billions to device makers and browser developers, including Apple. Judge Amit Mehta has found that Google is liable for anti-competitive conduct in general searches, but is still considering appropriate remedies.
Both Apple and Google have filed potential remedies for the case, and Judge Amit Mehta is expected to announce their decision against them in early August. While Apple is not part of DOJ’s antitrust laws with Google, its favorable cost of traffic acquisition (TAC) agreement with Google could seriously affect the company by its outcome.
Google reportedly pays Apple $15 billion and $20 billion Annual to ensure that the search engine for your Apple device is the default.
The memo calculates that termination of the contract could cost Apple $12.5 billion a year. This is the worst case scenario, about 15% of Apple’s earnings per share. Analysts also suggested that Google loses its exclusiveness to do business with Apple, but Apple could potentially discover alternative monetizations or compensation from its competitors. The best scenario is that the judge only requests minor adjustments to Google’s practices, and TAC payments remain largely intact.
Jpmorgan said in the memo that it considers the central scenario to be the most likely outcome of the incident. They view more moderate treatments as a more plausible path of advancement. This includes changes such as an increase in user selection screen (users choose a search engine instead of default for Google) and partial restrictions on Google’s default status across Apple devices.
Analysts point out that an unlikely scenario of a complete loss of TAC revenue can be painful, but Apple has the key resources to absorb the impact and negotiate alternative transactions. The company can also search for monetization efforts if it increases its own ads and reduces exclusivity.
If Google loses its exclusiveness with Apple, it could also leave the tech giant and launch potential deals with competitors like that. Microsoft Or duckduckgo.
In another memo addressing the potential impact of corrective relief on the alphabet, the analyst said, “The ultimate impact on Google also depends on how it depends on Apple (technically not on the litigation party, but on how it relies on Apple) by successfully searching Safari after the Google-Doj case has been resolved.”
They estimated that the worst-case scenario could lead to Google at a potential revenue risk of $18 billion, but analysts repeated that they hoped the judge would impose a moderate relief package rather than banning the default contracts that would help Google maintain significant traffic.
Apple representatives did not immediately respond to requests for comment from luck.