"The ruling, for instance, leaves intact the multibillion-dollar arrangement that makes Google the default on Apple devices -- a high-margin revenue stream that investors in the iPhone-maker have worried could be curtailed. The market's read-through was simple: Alphabet's win reduces uncertainty for Apple, which reportedly receives around tens of billions of dollars annually from Alphabet to keep Google Search as the default on Safari."
"Apple's search-deal tail risk eased after the court let default search engine payments continue this week, supporting the durability of the iPhone-maker's important services segment. Tim Cook had flagged on the Q3 call that Apple's outlook assumed the Google revenue-share agreement continues. With a premium valuation multiple for the stock already in place, future returns lean on sustained services growth and execution as regulatory details evolve."
Federal court remedies in the government antitrust case against Google left intact core search and advertising assets and allowed default search engine agreements to continue. The ruling preserved the multibillion-dollar arrangement that makes Google the default on Apple devices, maintaining a high-margin revenue stream that reportedly sends tens of billions annually to Apple. Those traffic-acquisition payments have been a meaningful contributor to Apple's Services economics. Tim Cook indicated on the Q3 call that Apple's outlook assumes the Google revenue-share agreement continues. With a premium valuation already priced in, future returns depend on sustained services growth and execution as regulatory details evolve.
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