2 iPad Air Video Reviews, 2 iPhone 12 Case and MagSafe Charger Reviews + Apple's Message on New Ways to Shop
Apple is Attempting to move more of its Supply Chain to the U.S. starting with Chip Production if given Crucial Tax Breaks

Apple's Services Success Relies on Massive Payments from Google for making their Search Engine exclusive on Safari

1 cover google search on iPhone  Patently Apple

 

Yesterday Patently Apple posted a report titled "The U.S. Justice Department & 11 States Sue Google for Violating Antitrust Laws in Respect to Search & Search Advertising Markets." The Department of Justice press release stated that they along with eleven state Attorneys General, filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia to stop Google from unlawfully maintaining monopolies through anticompetitive and exclusionary practices in the search and search advertising markets and to remedy the competitive harms.

 

The focus of the lawsuit puts Apple in the heart of the Government's argument. The DOJ cites public estimates to say that Apple collects between $8 billion and $12 billion in payments from Google. That means it’s between 17% and 26% of Apple’s services revenue last fiscal year.

 

In particular, the DOJ's complaint alleges that Google has unlawfully maintained monopolies in search and search advertising by: Entering into long-term agreements with Apple that require Google to be the default – and de facto exclusive – general search engine on Apple’s popular Safari browser and other Apple search tools.

 

CNBC reports today that some analysts are now worried that the antitrust attention on Google's search business could lead to changes that would hurt Apple’s services business revenue.

 

Deals with Apple and other hardware makers to be the default search engine is a target of the lawsuit and that's likely to end the lucrative Apple-Google deal. Apple devices accounted for nearly half of Google search traffic in 2019, according to the lawsuit.

 

In the light of regulatory pressure on both Apple’s licensing business with Google, and separate pressure on App Store practices given congressional hearings and a lawsuit with Epic Games, investors will likely take another look at Apple’s services story.

 

Bank of America analyst Wasmi Mohan wrote in a note this week: "Ultimately any changes to the rev share agreement could lead to a potential rev/margin headwind in services that may result in the valuation multiple contracting." For more on this, read the full CNBC report.

 

10.0F - Apple News

Comments

The comments to this entry are closed.