Apple's lucrative deal with Google could be under threat after a U.S. judge ruled that the Alphabet-owned search giant was operating an illegal monopoly.

A potential remedy for Google to avoid antitrust actions could involve terminating the agreement, which makes its search engine a default on Apple devices, Wall Street analysts said on Tuesday.

Google pays Apple $20 billion annually, or about 36% of what it earns from search advertising made through the Safari browser, for the privilege, according to Morgan Stanley analysts.

If the deal is undone, the iPhone maker could take a 4-6% hit to its profit, the analysts estimated.

The pact runs until at least September 2026 and Apple has the right to unilaterally extend it for another two years, according to media reports in May that cited a document filed by the Department of Justice in the antitrust case.

"The most likely outcome now is the judge rules Google must no longer pay for default placement or that companies like Apple must proactively prompt users to select their search engine rather than setting a default and allowing consumers to make changes in settings if they wish," Evercore ISI analysts said.

Apple will have several options including offering customers alternatives such as Microsoft Bing to customers, or potentially a new search product powered by OpenAI which is currently testing their AI Search."

"Apple could see this as a temporary setback, especially since it earns a lot from the Google search deal, but it is also an opportunity for them to pivot to AI solutions for search," said Gadjo Sevilla, analyst at Emarketer. For more, read the full Reuters report.

A mega deal for another browser, including Microsoft's Bing, would certainly fall under the same antitrust scrutiny. That's why SearchGPT could be an alternative solution. Of course Google will appeal the latest ruling and all of this speculation could be for naught should Google win. Yet with a Harris/Walz ticket in the White House, the leftist government is likely to support more antitrust cases against the leaders of Silicon Valley. For now, there's definitely a lot of moving pieces in this puzzle, so only time will tell how this will all play out.