Apple is known for tightly controlling its communications. There are rarely any surprises, especially in quarterly reports. But something has changed in the current announcement. For the first time, the company is citing a potential risk that hasn't been publicly disclosed before: its collaboration with Google. Enormous sums of money are involved, and the issue has the potential to directly impact Apple's business.
A new wording stands out in Apple's latest earnings report . CFO Kevan Parekh explicitly mentions that the revenue forecast for the current September quarter assumes the existing revenue-sharing agreement with Google remains in effect. This is the first time Apple has publicly indicated the risk that this agreement could be terminated. The wording comes from the prepared statement for the conference call with analysts. There, Parekh stated that the forecasts assume that existing tariff regulations, political conditions, and macroeconomic assumptions remain the same—and that the deal with Google continues.
Billions from Google for the default place in Safari
Google pays Apple billions annually to have Google Search set as the default in Safari on iPhone, iPad, and Mac. According to published court documents, this amounted to approximately $20 billion in 2022. The deal secures Google access to a huge user base. For Apple, it is a stable source of income—part of its steadily growing services business. The economic importance of this partnership can hardly be overestimated. A potential loss would not only affect a major source of income but also impact the market position of both companies in the search and mobile sectors.
Antitrust proceedings bring movement into the matter
In August 2024, a US federal judge issued a significant ruling. The agreement between Apple and Google may violate antitrust law. While a final ruling has not yet been issued, the direction is clear. If the assessment is confirmed, the deal could be prohibited. Google has already indicated that it would appeal if the decision is negative. The process is therefore likely to drag on. Apple CEO Tim Cook declined to comment on the conference call. He stated that he did not want to speculate on possible rulings or how Apple would react in the event of a ban. In doing so, he made it clear that while internal considerations are underway, the company wants to keep all options open publicly.
A possible setback for Apple's sales development
The fact that Apple itself is addressing the risk for the first time in an official statement shows that it is taking the matter seriously. The revenue share from the Google deal is significant. A loss of this revenue would have to be offset either through new partners, its own services, or cost-cutting measures – which would not be without consequences. Furthermore, the question arises as to how Apple would handle the default search engine in the future. A proprietary solution is conceivable, but would be challenging both technologically and in terms of market acceptance. Alternatives such as Bing or DuckDuckGo would be interested, but they probably couldn't afford Google's billions in payments on the same scale.
Apple prepares for possible changes of course
Apple is clearly preparing for potential changes, even if no concrete steps have yet been announced. The company is demonstrating a new openness in dealing with risks that were previously handled internally. The relationship with Google is economically important, but legally problematic. The outcome depends on the outcome of the antitrust proceedings. Until then, it remains unclear whether and how Apple will react to a potential end to the agreement. The coming quarters could provide initial indications as to whether Apple is actively seeking alternatives – or hoping for an agreement to be reached behind the scenes. (Image: Apple / Google)
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