Court decision jeopardizes multibillion-dollar deal between Google and Apple, which could significantly impact Apple's revenues and the search engine competitive landscape.
Search conflict between giants
Billion dollar deal in doubt
Google pays Apple a whopping sum of approximately $20 billion annually for the privilege of being the primary search engine on Apple devices. However, a recent court ruling may put an end to this agreement, recognizing it as contrary to antitrust laws.
Consequences for Apple
The court's decision on the illegality of payments from Google puts Apple in a difficult position. Considering that these payments make up about a quarter of the company's revenue from services, the loss of such a source of funding could seriously hit the Cupertino tech giant's budget.
Collaboration Mechanism
When you use the Safari search bar, results are automatically provided by Google unless the user has set up an alternative search engine. This seemingly insignificant operation costs Google billions of dollars, but generates huge advertising revenue. For the search giant, this is a profitable investment, since iPhone owners represent an attractive audience for advertisers due to their high purchasing power.
Financial aspect for Apple
For Apple, these payments require virtually no additional costs, since they are not associated with the need to modify the operating system systems. According to a 2022 court ruling, the amount Google paid Apple for its default search engine status was as high as $20 billion.
- Apple's services revenue is $78.13 billion, of which $20 billion comes from Google.
Antitrust concerns
Such large payments from Google to Apple put other players in the search market systems at a disadvantage. This prompted the US Department of Justice to declare Google's actions illegal. There is a possibility that Google will have to stop paying Apple to comply with the court order.
Glossary
- Google is an American multinational corporation specializing in Internet services and products.
- Apple is an American technology company, manufacturer of personal and tablet computers, audio players, smartphones and software.
- Safari is a web browser developed by Apple Corporation.
- iPhone is a line of smartphones developed by Apple Inc.
- The United States Department of Justice is a federal law enforcement agency in the United States.
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Answers to questions
How much does Google pay Apple each year to become a major search engine? ?
Why can this transaction be declared invalid?
How much of Apple's services revenue comes from payments to Google?
Why is this deal good for Google?
What consequences may have the recognition of a transaction as illegal?
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Discussion of the topic – Apple could lose $20 billion: Google under threat of monopoly scandal
A court may invalidate the $20 billion-a-year deal between Google and Apple that ensures Google's status as the primary search engine on Apple devices.
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Liam
What news! 😲 Google pays Apple $20 billion a year? This is a lot of money! I wonder how this will affect iPhone users?
Sophie
Yes, Liam, the amount is impressive! 💰 I think little will change for users, except that there will be more default search engine options. But for Apple this could be a serious blow to revenue.
Giovanni
Sophie, you're right. But maybe this is a chance for other search engines? 🤔 Bing or DuckDuckGo could get more users. Competition is always good for consumers.
Amelie
Interesting thought, Giovanni! I personally use DuckDuckGo for privacy reasons. It would be great if people had a more informed choice of search engine, and not one imposed by default. 🦆
Klaus
Nonsense. All these newfangled search engines are nonsense. Google works great, why change anything? They are just wasting money on these courts and proceedings. It would be better if they did something useful.
Isabella
Klaus, I understand your frustration, but competition can actually lead to better services. 😊 Imagine if a search engine appeared that was even better than Google! Progress does not stand still.
Liam
Isabella is right! 👍 By the way, I wonder how Apple will make up for the loss of income? Maybe they will raise prices for iPhones or launch a new service? 🍎
Amelie
Liam, I hope Apple comes up with a more creative solution than just raising prices. Maybe this will encourage them to create their own search engine? It would be interesting to see their approach to information retrieval. 🔍