What Does Google Antitrust Ruling Mean for Apple and Samsung?
The Google antitrust case has consequences for Apple and Samsung. Credit: Thai Nguyen on Unsplash
Key Takeaways
- A U.S. Judge has ruled that Google holds an illegal monopoly over the search market.
- The ruling could end deals in which Google has paid Apple and Samsung billions of dollars to make its search engine the default on their smartphones.
- Given that the two firms are set to lose a lucrative revenue stream, would opening up the search market benefit them long-term?
After a U.S. Judge ruled on Monday, Aug. 5, that Google’s arrangements with smartphone manufacturers create an illegal search monopoly, Apple, Samsung and others could lose a lucrative source of income.
According to the ruling, Google has spent billions of dollars ensuring its search engine is the default option on most smartphones. But how much will it cost manufacturers if such deals are undone by the court?
Google–Safari Deal Worth $20 Billion a Year
At present, the largest beneficiary of Google’s search agreements is Apple, which reportedly receives 36% of advertising revenues generated by Google through Safari. That translates to roughly $20 billion annually.
The deal with Apple and other revenue-share agreements has become the single largest expense for Google’s search business. According to Judge Amit P. Mehta’s ruling, payments to device manufacturers, browser developers and mobile carriers cost the firm $26 billion in 2021.
Meanwhile, during testimony in another major antitrust trial—Google vs. Epic Games—it was revealed that Google agreed to pay Samsung $8 billion over four years to default embed its search engine, voice assistant and Play Store on the company’s mobile devices.
However, revenue losses for manufacturers are only one part of the story.
The Silver Lining
For Apple and Samsung, there is an important silver lining to the potential nullification of revenue-sharing arrangements with Google: the chance to rewrite the rules of search.
For two and a half decades, Google has established itself as the undisputed king of search, relegating competitors to the sidelines. The larger it became, the more data it collected to cement its lead.
As Judge Amit P. Mehta put it in his opinion :
“Google has used its scale advantage to improve the quality of its search product. At every stage of the search process, user data is a critical input that directly improves quality.”
In other words, Google’s data advantage is a self-fulfilling prophecy. But if, as Mehta concluded, users only really default to the search engine because that’s how their browsers and operating systems are configured, then breaking the cycle of data accumulation would give alternatives a fighting chance.
This potential transformation of the search market comes at a time when the way people access information online is already shifting.
Changing Search Habits
Shortly after OpenAI released ChatGPT in 2022, Google management reportedly issued a “code red” over concerns that the surging popularity of large language models (LLMs) could upend the dominant search paradigm.
Since then, the firm has scrambled to catch up, launching its own competitor chatbot and rolling out a suite of new AI search features. But Gemini hasn’t proven nearly as popular as ChatGPT. Meanwhile, the recently launched SearchGPT takes direct aim at Google’s traditional stronghold.
Amid such developments, recent updates from Apple and Samsung suggest they are already positioning themselves for a future where they are less beholden to Google Search.
Seizing the Opportunity
The forthcoming Apple Intelligence combines proprietary language models with OpenAI’s GPT-4o. But Apple has hinted that additional models could be integrated further down the line and has reportedly held talks with Google and Anthropic about potential arrangements.
For its part, Samsung AI currently relies heavily on Google’s models. However, the Korean technology giant isn’t resting on its laurels; it is building a new AI assistant entirely in-house.
Of course, if language models are the new search engines, ongoing maneuvering to claim a slice of the pie sets the stage for the same antitrust battle to play out all over again if the gatekeepers to large mobile ecosystems are seen to be unfairly favoring certain products.
The first signs of monopoly concerns in the LLM market have already emerged. Regulators around the world are probing OpenAI’s relationship with Microsoft. Its partnership with Apple has also come under scrutiny.
In the wake of Monday’s antitrust ruling, Apple, Samsung and others have a chance to reset norms that have been in place since the dot-com boom. How they proceed from here could have consequences for years to come.
