Apple's Profits at Risk from Google Antitrust Ruling

A US judge's ruling in a Google antitrust case could negatively impact Alphabet's search market dominance and potentially benefit the company's stock. However, for Apple, the ruling could lead to a loss of a key revenue source, resulting in a double-digit reduction in profits. The final ruling on remedies is expected this month, which could lead to volatility in Apple's stock.

A U.S. judge's ruling in the Google antitrust case could significantly impact Alphabet Inc.'s (GOOGL) search market dominance and Apple Inc.'s (AAPL) financial health. The ruling, expected this month, could lead to increased volatility in Apple's stock due to potential changes in its revenue streams.

The antitrust case, brought by the Department of Justice, alleges that Google has maintained a monopoly over internet search services. Judge Amit Mehta of the U.S. District Court for the District of Columbia has been considering remedies for Google's alleged anti-competitive behavior. The potential remedies include forcing Google to divest its Chrome browser or unwind its default search deals, including payments to Apple [1].

Apple, which receives over $20 billion annually from Google to make Google the default search engine on iPhones, could face a significant reduction in profits if the ruling mandates a change in these arrangements. JPMorgan analyst Doug Anmuth has noted that the ultimate impact on Google will depend on Apple's actions post-ruling [2].

In contrast, Alphabet could experience a boost in its stock price if the ruling does not require a divestiture of Chrome. Wall Street analysts have indicated that most remedies, save for a Chrome divestiture, will have a relatively small impact on Google's distribution and use of its products [1].

The antitrust case is not Google's only challenge. In April, Judge Leonie Brinkema ruled that Google has used monopoly-building tactics to dominate online advertising. The DOJ has proposed remedies, including selling off Google's Google Ad Manager, which includes the company's publisher ad server and its ad exchange [1].

The outcome of the antitrust case could set a precedent in the ongoing battle to curb monopolistic practices in the tech industry. The ruling, expected this month, will be closely watched by investors and financial professionals.

References:
[1] https://www.investors.com/news/technology/google-stock-wall-street-awaits-judges-ruling-on-remedies-in-search-antitrust-case/
[2] https://www.ainvest.com/news/perplexity-offers-34-5-billion-google-chrome-antitrust-scrutiny-2508/