Google's Default Search Contracts Face Landmark Ruling: Impacting Apple and Alphabet

A US federal judge is expected to issue a landmark decision on Google's default search contracts, potentially disrupting deals worth over $26 billion for Alphabet and $20 billion annually for Apple. The ruling could impact control over the internet and affect both companies financially, with analysts predicting a more significant impact on Apple's pre-tax profits.

A US federal judge is expected to issue a landmark decision on Google's default search contracts, potentially disrupting deals worth over $26 billion for Alphabet and $20 billion annually for Apple. The ruling could impact control over the internet and affect both companies financially, with analysts predicting a more significant impact on Apple's pre-tax profits.

The case, which originated from a federal court ruling in August 2024, found Google guilty of using illegal means to maintain a monopoly over online search. Judge Amit Mehta concluded that Google's side payments to Apple, Samsung, and other companies totaling more than $26 billion in 2021 were in exchange for preserving Google's search monopoly [1].

The court is considering multiple remedy options, including requiring Google to share valuable data with rivals or more dramatic measures like breaking up the company by ordering it to sell the Chrome browser or Android operating system. The remedies package seeks to force Google to divest Chrome and potentially Android, while also requiring unprecedented data-sharing arrangements with competitors [1].

The antitrust case has already influenced industry behavior. Google's chatbot Gemini represents a capable alternative to OpenAI's ChatGPT, but the antitrust proceedings have limited Google's ability to secure major AI deals with companies like Apple. Apple executives have described having a different mindset in a world without payments from Google, leading Apple to choose ChatGPT for the iPhone's AI-assisted search functionality [1].

Should the court order Google to sell Chrome, the implications for AI development would be substantial. Chrome commands approximately 67% of the global browser market, and Google uses it to steer users toward both Google Search and Gemini while collecting valuable user data. A Chrome browser no longer controlled by Google would "transform the market for A.I. and search," according to Tim Wu, a Columbia law professor [1].

The court might also mandate that Google freely license its click and query data, which Wu describes as "the high-octane fuel of our A.I. age." This user search data and click patterns represent crucial training material for AI systems, and access could significantly enhance Google's competitors, particularly smaller companies with limited data resources [1].

The combined impact of multiple antitrust cases threatens Google's revenue streams across search and advertising. Google Services accounted for 87% ($84 billion) of Alphabet's revenue in the fourth quarter of 2024. The search case remedies, combined with separate advertising technology divestiture demands, could significantly impact Google's integrated business model [1].

The court is expected to deliver its remedy decision by August 2025, though Google has indicated it will appeal both the liability decision and whatever remedies are imposed. The legal process could extend well into 2026 or beyond, creating prolonged uncertainty for the technology ecosystem [1].

References:
[1] https://ppc.land/federal-court-decision-on-google-antitrust-remedies-may-transform-artificial-intelligence-landscape/