Apple’s shares rose up to 4.3% after a US judge allowed its search deal with Google to continue, despite an antitrust case targeting Google’s agreements with browser companies.

The ruling, issued by Judge Amit Mehta, prohibits Google from entering exclusive contracts for internet search but still permits deals that let Google be the default search engine, including on Apple’s Safari browser.

Apple’s arrangement with Google has generated about US$20 billion in annual revenue for the iPhone maker.

Under the decision, browser developers like Apple can accept payments from Google but must also promote alternative search engines, provide different options in some operating systems or privacy modes, and may change default search settings each year.

Apple users can already switch from Google to other search engines, such as Bing or DuckDuckGo, and iOS has allowed different search engines in private mode since 2023.

Google’s shares also rose as much as 8.7% after the news. The ruling lets Google avoid selling its Chrome browser.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Apple’s services revenue heavily depends on a single partner agreement

The Google search deal represents a massive revenue concentration risk for Apple, with the $20 billion annual payment constituting approximately 20% of Apple’s entire services revenue 2.

This dependency becomes particularly striking when viewed alongside Apple’s broader business transformation, as the company has increasingly relied on its services segment due to slowing hardware sales growth in recent years.

The judge’s decision to maintain the payments while adding restrictions like annual contract limits and requirements to promote alternative search engines creates a new regulatory framework that both companies must now navigate 3.

For Apple, losing this revenue stream could impact earnings per share by approximately 15%, according to analyst estimates, highlighting how a single partnership has become integral to the company’s financial performance 4.

2️⃣ US and European regulators take markedly different approaches to tech antitrust enforcement

While the US judge allowed Google to continue its revenue-sharing payments to Apple with modifications, European regulators have taken a much more punitive approach to similar market dominance issues.

The European Commission fined Google €1.49 billion in 2019 specifically for abusive practices in online advertising, where Google imposed restrictive clauses preventing website owners from displaying competitors’ ads 5.

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