Washington DC:

Two of the world’s largest tech behemoths – Apple and Google – are participating together in what is increasingly seeming like an indefensible case. Billions and billions are at stake and Google, the world’s ‘default’ search engine, stares into the abyss.

There is much to lose for both tech giants – for Apple it could lead to losses worth tens of billions of dollars per year and an incomprehensible fallout on the accuracy of its results on features like Siri and Spotlight, whose framework is largely dependent on Google search. For Google, besides money and market share, it may result in the massive loss of its entire web browser – Chrome. It also faces another potential gigantic loss – its Android operating system.

And so, finding Google in a major spot of bother, Apple has sought to participate in the anti-trust trial against Google over its internet search engine. Apple on Tuesday said it needs to step in as it cannot rely on Google alone to defend the revenue-sharing agreements that the two firms have.

The epicenter of the case, which has sent tremors across Silicon Valley, lies in an agreement between Google and Apple, wherein the iPhone, iPad, and Macbook maker gets tens of billions of dollars each year for making Google the default search engine on its browser – Safari. In 2022 alone, Apple reportedly received in excess of $20 billion as a result of this very agreement.

The question at the heart of the case is simple – Has Google monopolised online search? According to Google – No, it has not.

A monopoly in simple business terms is a situation where a single company controls the entire market. In such a scenario it becomes difficult or sometimes impossible for the competition to compete due to the lack of a level-playing field.

Focusing on this very point, Apple’s lawyers submitted their papers to the court on Tuesday, in which they conveyed that Apple and Google are not competitors, and neither does Apple want to compete in the search engine space. It also said that that is how it will be whether or not Apple receives the billions of dollars from Google in future.

Apple, in its petition, also said it wants to call witnesses who will testify under oath at the trial scheduled for April 2025. On that day, the prosecutors will aim to highlight that Google absolutely must take multiple measures – two of them being selling its Chrome browser and possibly its Android operating system too. The prosecutors believe that only then will competition be restored in online search. But should this happen, it will be a fatal blow to Google.

While Google’s parent firm Alphabet is figuring a way to battle this grave threat to its existence, Apple, which understand the gravity of the situation has said “Google can no longer adequately represent Apple’s interests. Google must now defend against a broad effort to break up its business units.”

Meanwhile, justifying its stand, Google has asserted that the entire premise of the case is based on exclusive deals – and that is what the focus of the case should be on, instead of an aim to breaking Google. It has even offered to put an end to such deals in future.

Besides ending the deal with Apple, Google has even suggested that it is willing to no longer enter any agreement with Android phone manufacturers which require the phone-maker to set Google as the default search engine in return for its operating system and supporting apps. Google also said that browser companies like Mozilla would be given more flexibility in setting rival search engines as its default search. This, according to Google’s lawyers, is a fair solution to make the market more competitive.

Between now and the crucial hearing in April, Google is doing all it can to defend itself and limit its losses should it lose the groundbreaking case.

The US Department of Justice vs Google is poised to be a defining moment for the global tech industry – a landmark case that may just reshape how the world uses the internet.
 

San Francisco:

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’s shares were trading flat on Tuesday, underperforming a recovery in the broader market after Monday’s global selloff. Alphabet was little changed, after falling 4.5% in the previous session.

“The message here is that if you’ve got a dominant market position with a product, you’d better avoid the use of exclusive agreements and make sure any agreement you make gives the buyer free choice to substitute away,” said Herbert Hovenkamp, a professor of law at the University of Pennsylvania.

To be sure, the “remedy” phase could be lengthy, followed by potential appeals to the U.S. Court of Appeals, the District of Columbia Circuit and the U.S. Supreme Court. The legal wrangling could play out into 2026.

AI TILT

Still, if the tie-up is scrapped, Apple will have several options including offering customers alternatives such as Microsoft Bing to customers, or potentially a new search product powered by OpenAI.

Analysts agree that the ruling will speed up Apple’s move towards AI-powered search services. It recently announced that it would bring OpenAI’s ChatGPT chatbot to its devices.

In a shift away from exclusive deals that would help Apple ward off regulatory scrutiny, the company has said it is also in talks with Google to add the Gemini chatbot and plans to add other AI models as well.

Apple is also revamping Siri with AI technology, giving it more control to handle tasks that had proven tricky in the past such as writing emails and interacting with messages.

While those efforts are expected to make little money in the coming years, they could help capitalize on the new technology.

“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.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)