Google could end its deal with Apple as a potential way to avoid antitrust action, analysts said on August 6, which would have made Google’s search engine the default on Apple devices.

According to Morgan Stanley analysts, Google pays Apple $20 billion a year, or about 36% of the money it earns from search ads through its Safari browser, for the privilege of being the default search engine on Apple devices.

Analysts estimate that if the deal does not go through, the iPhone maker could suffer a 4-6% drop in profits.

According to media reports in May citing a document filed by the US Department of Justice in an antitrust case, the agreement between Google and Apple is valid until at least September 2026, with Apple having the right to unilaterally extend it for another two years.

“The most likely outcome is that a judge rules that Google can no longer pay for default placement, or that companies like Apple must proactively prompt users to choose a search engine instead of setting the default, and allow users to change the setting if they want,” Evercore ISI analysts said.

“The message here is that if you have a dominant market position in a product, you better avoid using exclusivity agreements and make sure that any agreements you do make allow buyers to have a free choice of alternatives,” said Herbert Hovenkamp, ​​a law professor at the University of Pennsylvania.

If this partnership is canceled, Apple will have a number of options including offering customers alternatives like Microsoft Bing or potentially a new search product powered by OpenAI.

Analysts agree that the ruling will accelerate Apple’s move toward AI-powered search services. The company recently announced that it would be bringing OpenAI’s ChatGPT chatbot to its devices. The company said it is also in talks with Google to add its Gemini chatbot and plans to add other AI models.

Apple is also improving Siri with AI technology, helping Siri better control previously difficult tasks like writing emails and interacting with messages.

“Apple may see this as a temporary setback, especially since it makes a lot of money from its search deal with Google, but it also presents an opportunity for them to move into AI solutions for search,” said Gadjo Sevilla, an analyst at Emarketer.

Hoai Phuong (according to Reuters)