Judge’s Ruling Could Shake Up Google and Apple’s $26 Billion Search Pact

The case stems from U.S. District Judge Amit Mehta’s ruling last year that Google maintained a monopoly in search and advertising. Since then, the court has been considering remedies, while another trial focused on Google’s ad business is set to begin under a different judge. Per CNBC, although Google risks losing predictability in its search traffic, Apple could face the sharper financial blow, as the payments contribute significantly to its profits. Analysts at Jefferies estimate that Apple’s pre-tax earnings could decline by as much as 7% if exclusivity is barred but some payments remain intact.

Yet not all experts believe Google stands to lose. Some economists and market strategists argue the company may benefit in the long run by shedding costly agreements that no longer drive demand. Barclays analysts noted that even without default contracts, smaller rivals would find it “nearly impossible” to compete with Google’s scale. Microsoft, for example, has invested heavily in Bing but still trails Google. During the trial, Apple Senior Vice President Eddy Cue testified that Google simply offered stronger results, even rejecting Microsoft’s attempt to provide Bing for free.

User behavior appears to back that claim. According to CNBC, when European regulators forced consumers to actively choose their default search engine, Google’s market share barely changed, remaining around 90%. Economist Lones Smith likened Google’s position to that of a utility company, explaining that its dominance persists even without payments to Apple. He told CNBC that it’s difficult to imagine Apple users switching en masse to another provider if the contracts disappeared.

Read more: Google Offers Play Store Changes to Avoid EU Penalties

The Justice Department, however, believes curbing exclusivity could open space for competitors. Former FTC Chair William Kovacic described the government’s push as “an act of faith,” suggesting that removing barriers can sometimes unleash unforeseen innovation. Rebecca Allensworth, a law professor at Vanderbilt, said the agreements effectively freeze the industry by insulating Google from competitive pressure, which is why the company fought so hard to preserve them.

While remedies such as breaking up Chrome have been discussed, Kovacic warned such measures might be more symbolic than practical. Instead, regulators are exploring restrictions on Google’s artificial intelligence business, including potential requirements to share anonymized search data with rivals. Per CNBC, that reflects concern that the company could replicate its dominance in search as it builds its AI platform, Gemini.

The ruling will come as Google and Apple both push deeper into artificial intelligence. Wall Street analysts have speculated that without the $20 billion in annual payments to Apple, Google could redirect resources into AI and cloud growth, bolstering its profits while keeping its lead intact. Apple, meanwhile, has begun weaving OpenAI’s ChatGPT into its ecosystem, with executives hinting that other AI services like Anthropic and Perplexity may soon follow.

Whatever the outcome, experts agree the decision will mark a turning point in how consumers, companies, and regulators view the future of internet search.

Source: CNBC