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Antitrust Lawsuit Threatens Apple’s Lucrative Deal with Google

Apple’s deal with Google that makes it the default engine on Safari faces uncertainty as the U.S. Department of Justice’s antitrust lawsuit looms, The Information reports.

Apple’s contract with Google, which ensures that Google’s search engine is the default on Apple’s Safari browser, has been a significant source of revenue. In 2022, the arrangement reportedly netted Apple over $20 billion, an amount derived from 36 percent of the ad revenue generated by searches on Safari, as revealed in court documents.

The agreement has substantial financial implications for both companies. For Apple, the payments from Google constitute an important revenue stream as a significant proportion of its profits. If the court rules against Google, it could lose access to approximately 70 percent of iPhone searches. This would significantly impact Google’s mobile search advertising revenue, which was a major contributor to its $207 billion in search ad revenue in 2023.

Google has been working to reduce its reliance on the deal. The company has been actively encouraging ‌iPhone‌ users to switch from Safari to its own apps, Google and Chrome. Google has invested heavily in enhancing its mobile apps with features such as the Lens image search function and the Discover feed, which surfaces personalized content. In 2022 and 2023, Google launched extensive TV and online advertising campaigns showcasing exclusive features available only on its apps. However, over the past five years, Google has only managed to increase the percentage of ‌iPhone‌ searches conducted through its apps from 25 percent to the low 30s.

Earlier this year, Google hired Robby Stein, a former Instagram and Yahoo executive, to spearhead efforts to increase the adoption of its apps among ‌iPhone‌ users. Stein’s strategies include exploring the integration of generative AI to enhance the appeal of Google’s mobile apps. The company now wants to double the number of Google searches performed outside Safari, even as the number accomplished in the Google and Chrome apps stalled last year.

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The shift is particularly important to Google in an effort to mitigate the impact of the potential outcome of the U.S. Department of Justice’s antitrust lawsuit. A ruling against Google would also set a precedent for how Apple’s default settings and competitive practices are regulated.

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