Google was spared the worst possible judgment in its landmark antitrust case Tuesday: A judge allowed it to keep Chrome and Android under its fold and continue to pay tech companies to promote its search engine. That good news for Google is also good news for Apple.
Judge Amit Mehta on Tuesday ruled that Google cannot enter into exclusive agreements with companies, but it will be permitted to continue paying partners to distribute its services. That means it can still pay Apple billions – sums that were estimated to be $20 billion in 2022 alone – to cement itself as the iPhone maker’s default web browser search option.
As a result, Apple can continue raking in billions of dollars from Google while also dodging what would have likely been a daunting task affecting Apple’s most important products, from the iPhone to the Mac and iPad. It saved Apple from answering a difficult question: What search engine will come preloaded in the billions of Apple devices used around the world?
The challenge of finding a new default search provider would have come at a less-than-ideal time for Apple, which is already navigating changes to lucrative App Store because of EU regulations and has struggled to keep pace in AI – a field that has threatened to replace the search engine in some ways.
“This was a black cloud worry over Apple’s stock as investors worried a Google Chrome breakup and/or forced to extinguish the search deal with Apple was potentially on the docket,” Wedbush Securities analyst Dan Ives said in a research note following the ruling.
Shares of Apple (AAPL) rose more than 3% Wednesday. Google (GOOGL) surged nearly 9%.
Apple did not immediately respond to a request for comment on the ruling.
Google is the world’s most pervasive search engine, occupying roughly 90% of global search engine usage as of August, according to web analytics company Statcounter Global Stats. Bing is a distant second with just under 4% of the search market. If Apple weren’t allowed to partner with Google anymore, it likely would have had to choose a less popular option or develop its own search engine.
Eddy Cue, Apple’s senior vice president of services, said in a court filing from last year that the company is unlikely to develop its own search engine because its focused on other growth areas.” He also said it would be “economically risky” to devote resources to creating a search engine given the space is rapidly changing because of AI.
They key question at the heart of the Department of Justice’s case was whether Google is so popular because it’s the best, or because of its position as the default option on mobile devices and web browsers, enabling it to rely on consumer habit rather than choice.
Apple has indicated it’s the latter.
“Certainly there wasn’t a valid alternative to Google at the time,” Cue said in his courtroom testimony from 2023 during the trial according to The Verge.
That doesn’t mean Apple won’t have to reconsider its approach to search. While chatbots like ChatGPT aren’t replacing search engines, they’re expected to eat into the search market. Gartner, a market research firm, estimated last year that search engine volume would drop 25% by 2026 as consumers gravitate toward AI tools.
Google search queries on Apple devices also decreased for the first time in April, Cue said in the courtroom according to Bloomberg, although Google previously said it’s continued “to see overall query growth in search,” and that includes “an increase in total queries coming from Apple’s devices and platforms.” That figure alone doesn’t mean people are using AI apps instead of searching, it could just indicate they’re using the Google app instead of Safari.
Even though Google is still popular, the rise of AI tools has led the company to revamp its approach to search. Google broadened its AI Mode to all US Google app users earlier this year, perhaps another indicator that AI is shaping the way people find information online beyond chatbots like ChatGPT and Google’s Gemini.
Apple will likely have to embrace that shift to stay relevant, and reports indicate it’s already weighing doing so. The company has reportedly internally floated the idea of buying AI search startup Perplexity, according to Bloomberg. Cue said in his testimony that AI services from OpenAI, Perplexity and Anthropic could replace traditional search in the future and that Apple may eventually bring those options to Safari, Bloomberg also reported.
But thanks to Tuesday’s ruling, Apple can figure it out on its own timeline.