The profitable partnership between Apple and Google may be at risk after a United States judge ruled that the search giant, owned by Alphabet, operated an illegal monopoly.
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Wall Street analysts stated on Tuesday (6) that a possible measure to avoid antitrust actions could involve terminating the agreement that makes the Google the default search engine on devices Apple.
O Google paid to Apple $20 billion annually, about 36% of the revenue generated by search ads made through the Safari browser, for the privilege, according to analysts at Morgan Stanley.
If the agreement is broken, the manufacturer of iPhone could suffer a 4% to 6% drop in profits, analysts estimated.
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The pact remains valid until at least September 2026, and the Apple has the right to unilaterally extend it for another two years, according to media reports in May, citing a document filed by the Justice Department in the antitrust case.
âThe most likely outcome now is that the judge determines that the Google can no longer afford standard positioning or that companies like Apple they should proactively prompt users to select their search engine rather than setting a default and allow consumers to make changes to settings if they wish,â said analysts at Evercore ISI.
The actions of Apple closed flat on Tuesday, underperforming the broader market's recovery following Monday's global plunge. Alphabet had little variation, after falling 4,5% in the previous session.
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âThe message here is that if you have a dominant market position with a product, it is best to avoid using exclusive agreements and ensure that any agreement you make gives the buyer freedom of choice to substitute,â said Herbert Hovenkamp, âââLaw professor at the University of Pennsylvania.
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