In a significant legal setback, Google (GOOG, GOOGL) was dealt a blow as Judge Amit Mehta of the District of Columbia ruled in favor of the Department of Justice in an antitrust case against the tech giant.
This ruling not only threatens Google's search and advertising business but also puts a crucial revenue stream for Apple (AAPL) in jeopardy.
Impact on Apple:
The ruling might compel Google to alter its largest business operations and could potentially end its longstanding revenue-sharing agreement with Apple.
This agreement, known as the Information Services Agreement, mandates Apple to use Google as the default search engine on its devices.
In return, Google pays Apple 36% of the search revenue generated on Apple devices, estimated at $20 billion in 2022.
Financial Implications:
This revenue contributes significantly to Apple’s Services business segment, which recorded $78.1 billion in 2022.
If the $20 billion estimate holds true, the Google deal constitutes approximately 25% of Apple's Services revenue, underscoring its critical importance as Apple's iPhone sales slow and its Services segment becomes a key growth area.
Apple did not immediately comment on the ruling's potential impact.
The outcome of this antitrust case could therefore reshape financial dynamics for both tech giants, especially concerning their intertwined business agreements.
This ruling not only threatens Google's search and advertising business but also puts a crucial revenue stream for Apple (AAPL) in jeopardy.
Impact on Apple:
The ruling might compel Google to alter its largest business operations and could potentially end its longstanding revenue-sharing agreement with Apple.
This agreement, known as the Information Services Agreement, mandates Apple to use Google as the default search engine on its devices.
In return, Google pays Apple 36% of the search revenue generated on Apple devices, estimated at $20 billion in 2022.
Financial Implications:
This revenue contributes significantly to Apple’s Services business segment, which recorded $78.1 billion in 2022.
If the $20 billion estimate holds true, the Google deal constitutes approximately 25% of Apple's Services revenue, underscoring its critical importance as Apple's iPhone sales slow and its Services segment becomes a key growth area.
Apple did not immediately comment on the ruling's potential impact.
The outcome of this antitrust case could therefore reshape financial dynamics for both tech giants, especially concerning their intertwined business agreements.