A federal judge found Google holds a monopoly in search and ads and is weighing remedies that could restrict default search contracts. The Apple-Google deals generate over $26 billion annually, about $20 billion to Apple and nearly a quarter of Alphabet's operating income. Blocking exclusive contracts could reduce Apple's pre-tax profits by up to 7%, depending on new agreements and the ruling's scope. Some analysts say Google could benefit long-term by shedding costly payments that no longer drive demand. Rivals like Microsoft have invested heavily in Bing without closing Chrome's lead. Apple executives say users can switch search engines easily.
Any day now, a federal judge is expected to issue a landmark ruling that could upend some of the most lucrative deals in Silicon Valley: Google's default search contracts. At stake is more than $26 billion a year, $20 billion of which goes to Apple. That's nearly a quarter of Alphabet's operating income. For decades, the Apple-Google pact has helped determine who controls the internet, which is exactly why it's now in the crosshairs.
U.S. District Judge Amit Mehta ruled last year that Google held a monopoly in search and ads. He's been weighing remedies since the final phase of the trial wrapped in May, with a separate case on Google's ad business set to begin next month under a different judge. While Google risks losing some search traffic and predictability, analysts say Apple could take a bigger financial hit. The impact will hinge on whether Apple lines up new deals and how broadly the ruling applies.
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