In a significant legal development, a federal district judge has ruled that Google will continue its revenue-sharing payments to distribution partners, specifically impacting Apple. This decision, rendered by District of Columbia Judge Amit Mehta, allows Google to maintain its financial arrangements regarding the placement and preloading of its services, including Search, Chrome, and generative AI offerings.
The ruling is particularly pivotal for Apple, which stands to receive an estimated $20 billion annually for designating Google as the default search engine in its Safari browser, as well as across Siri and other services. Following the announcement, Apple’s stock surged more than 2.5%, reaching approximately $236 per share in early trading on Wednesday.
As part of the ruling, Google’s agreements with Apple will be limited to one-year terms, paving the way for Apple to potentially renegotiate the conditions of its revenue-sharing deals. Furthermore, the ruling stipulates that Google cannot mandate companies to exclude competing applications and services from their devices. Notably, Apple is already providing access to rival AI platforms, such as ChatGPT, through its Apple Intelligence platform.
This ruling arrives amid Google’s intention to appeal a previous decision that characterized the company as an illegal monopolist. Despite the ongoing legal complexities, Apple appears to be regaining stability after years of ambiguity concerning its partnership with Google.
The financial implications of this agreement are significant; the $20 billion from Google contributes to Apple’s Services division, which generated $96.2 billion in revenue in 2024. This revenue from Google accounts for approximately 20.8% of the total income from the Services segment. It is crucial to highlight that this $20 billion figure is based on estimates for 2022 found in antitrust court documents, with the potential for an increase in subsequent years.
Bank of America Global Research analyst Wamsi Mohan characterized the ruling as a positive outcome for Apple, adjusting the firm’s price target for the company’s stock from $250 to $260. Mohan emphasized that while the details and implications of the ruling remain to be fully understood, the existing relationship and payment structure between Apple and Google are likely to remain intact in the short term.
Similarly, Morgan Stanley analyst Erik Woodring suggested that Judge Mehta’s ruling could have long-term advantages for Apple. He noted that the decision allows for continued payments from Google while enabling Apple to renegotiate payment rates annually. This could lead to improved monetization of search capabilities with a range of traditional and new AI-powered search partners. Furthermore, Apple retains the option to introduce a choice screen for search engines and possibly collect new fees from other search partners if it decides to do so.
