A landmark decision is coming over Google’s business model. CNBC reports that any day now, U.S. District Judge Amit Mehta is expected to issue a ruling on remedies in Google’s long-running antitrust case.
This is a decision that could effectively end some of the most beneficial contracts in Silicon Valley: Google’s default search agreements.
At stake is more than $26 billion annually, including a staggering $20 billion Google pays Apple to remain the default search engine on iPhones, iPads and Macs. That is nearly a quarter of Alphabet’s annual operating income.
If Google loses these deals, does it risk losing its search dominance? Or, as some Wall Street analysts argue, could the loss free up resources that Google can pour into Gemini, its AI platform and potentially make it even stronger?
The Case Against Google’s Default Search Deals
This all stems from the Justice Department’s antitrust lawsuit against Google. Last year, Judge Mehta ruled that Google holds a monopoly in search and ads.
The remedy phase, essentially deciding what to do about it—is what’s now reaching a conclusion.
The core of the government’s argument is that Google’s default agreements with Apple and other device makers shut out competition, which makes it harder for rivals like Microsoft’s Bing or DuckDuckGo to gain traction.
For decades, the Apple-Google pact has quietly shaped who controls the internet and regulators believe it is time for change.
Google’s defense has been consistent: defaults may matter but users stick with Google because its search engine is better, not because they are forced to. And to be fair, the data seems to back that up.
In Europe, where regulators forced Android users to pick their default search engine after a 2018 ruling, Google’s market share barely budged but it still hovers around 90%, according to StatCounter.
So if defaults don’t change user behavior, why does Google pay Apple $20 billion every year? That’s the puzzle.
What Happens If the $20 Billion Apple Deal Ends?
On the surface, losing the Apple deal sounds devastating. Imagine losing nearly a quarter of your operating income overnight. Yet analysts suggest the real impact may fall more heavily on Apple than on Google.
Jefferies analysts estimate that Apple’s pre-tax profits could drop by as much as 7% if those payments disappear. For Apple, the search deal is essentially “free money” that flows directly to its bottom line.
Google, on the other hand, may lose some predictability and a bit of traffic, but history shows users rarely switch.
As Apple’s own Eddy Cue testified during the trial, no offer Microsoft made, including offering Bing for free, was enough to justify ditching Google. “I don’t believe there is a price in the world that Microsoft could offer us. They could give us the whole company,” Cue said.
And Apple CEO Tim Cook admitted back in 2018: “I think their search engine is the best.”
Even Apple executives seem to admit Google dominates on quality, not just contracts.
Is Google Really a Monopoly or Just a Utility?
Economists call this a “natural monopoly”—where scale breeds quality and quality reinforces scale. As economist Lones Smith put it, Google is like water or electricity: breaking it up may not make sense.
“If they did not pay Apple $20 billion, do they think people would really be using another search engine? I don’t see that,” Smith told CNBC.
He likened Google to a regulated utility, something so entrenched and efficient that the only question is how to regulate it, not whether to split it apart.
Wall Street Sees Upside in Redirecting $26 Billion
This is where things get interesting. From Wall Street’s perspective, if Google stops paying Apple and others $26 billion every year, it suddenly has billions of dollars to redirect elsewhere—most notably into AI and cloud services.
Analysts at Barclays argued earlier this month that even if these contracts unwind, it’s “nearly impossible” for smaller players to compete with Google at scale.
After all, Microsoft has poured $100 billion into Bing over the years and still hasn’t closed the gap.
So, what if Google poured those billions into Gemini, its AI platform, instead? That could shift the entire narrative of Google being “behind” in AI.
Already, benchmark tests show Gemini improving rapidly and analysts believe 2026 could be the year Google closes the gap with OpenAI’s ChatGPT.
Dan Niles, founder of Niles Investment Management, told CNBC that Google could actually emerge stronger: “Google to me, quite honestly, once this is done … next year, if they continue down this path, it could be one of the best-performing stocks out there.”
What Remedies Could Be on the Table?
Judge Mehta has several options. He could:
- Block exclusive contracts but still allow limited payments.
- Impose shorter contracts with multiple providers.
- In an extreme scenario, force structural changes, like separating Chrome from Google Search.
The Justice Department has even floated data-sharing mandates, which would force Google to share anonymized search data with rivals to help them compete. That, arguably, is a much bigger threat than losing defaults.
Rebecca Allensworth, an antitrust law professor at Vanderbilt, called the payments a form of “innovation insurance” that froze the market. But she also noted that strong remedies don’t always spell doom: “These are not existential threats to the company.”
Former FTC Chair William Kovacic added that flashy remedies like breaking up Chrome might be symbolic but not necessarily effective. “The big breakup has always been antitrust fascination,” he said. “But you can wonder whether that distracts you from solutions that solve the competitive problem you’ve identified today.”
Apple’s Dilemma and the AI Shift
If Google loses the case, Apple faces a tricky pivot. At WWDC 2024, Apple announced it was integrating ChatGPT into iOS, while also leaving the door open for services like Perplexity and Anthropic’s Claude to appear in Safari.
But none of these alternatives have Google’s scale. Perplexity, for instance, reportedly handles 15 million queries per day. Google handles 10 billion.
Even if Apple expands its AI options, users are unlikely to abandon Google search. Which makes me think—was Apple more dependent on that $20 billion check than Google was on the traffic?
What Does This Mean for the Future of Search?
In many ways, this case is not just about defaults. It is about how search itself is evolving. AI-powered assistants are redefining how we find information.
Google CEO Sundar Pichai testified earlier this year that AI will “deeply transform” search. And in fact, even Google’s own proposed remedy pointed in that direction with shorter default contracts, multiple providers and a pivot toward AI integration.
For investors, the silver lining is clear: less money wasted on contracts that may no longer be necessary and more invested in the next frontier—AI.
Dileep Thekkethil
AuthorDileep Thekkethil is the Director of Marketing at Stan Ventures and an SEMRush certified SEO expert. With over a decade of experience in digital marketing, Dileep has played a pivotal role in helping global brands and agencies enhance their online visibility. His work has been featured in leading industry platforms such as MarketingProfs, Search Engine Roundtable, and CMSWire, and his expert insights have been cited in Google Videos. Known for turning complex SEO strategies into actionable solutions, Dileep continues to be a trusted authority in the SEO community, sharing knowledge that drives meaningful results.
