Apple could be the big loser in Google's antitrust defeat

A federal judge just ruled against Google in a major antitrust case. Apple could be a victim of the backlash.

That’s because much of the government’s case against Google — that it has an illegal monopoly on search — focuses on the deals Google makes with platforms and device makers to become their default search engine.

And the biggest one is the one that Apple has with Google, where Google pays Apple tens of billions of dollars a year – $20 billion in 2022 alone – to have pole position on the iPhone.

Judge Amit P. Mehta’s ruling that the deals hinder competition doesn’t provide for an appeal. And Google has said it plans to appeal the decision regardless. But if the ruling is ultimately upheld and forces Google to stop making exclusive search deals, it could threaten what has become an incredibly lucrative revenue stream for Apple.

“As this process continues, we will continue to focus on building products that people find useful and easy to use,” Kent Walker, Google’s chief counsel and head of public policy, said in a statement. I have also reached out to Apple for comment.

Apple is such a giant—it generated nearly $400 billion in revenue last year—that even a $20 billion deal might seem small to the company. And that number probably won’t go to zero. Whether Google is replaced by a competitor like Bing, or it continues to work with the iPhone but under different terms, Apple will probably still be able to make a lot of money renting space on its phones.

The Google deal remains a key part of Apple’s services business, though. As we’ve repeatedly noted, growing high-margin services revenue has become crucial to Apple as its core business—selling iPhones—slows or even declines. This can be seen in the company’s most recent quarter, when its hardware business grew by $1 billion—and its services business grew by $3 billion.

So anything that might undermine that story is a cause for concern for Apple. This was seen in real time Monday afternoon, when Apple’s stock price, already reeling from the general selloff in tech products, fell again after Mehta’s decision was made public. Today, the stock has recovered, probably because it’s too early to tell exactly what this will mean for Apple. But it’s certainly not nothing.