A federal judge is poised to deliver a landmark antitrust ruling that could unwind Google's $26 billion in annual search deals, including $20 billion paid to Apple. While Apple faces a 7% profit hit, Wall Street analysts see a silver lining: Google could redirect those billions into its Gemini AI platform, potentially transforming from an AI laggard into a dominant force. The decision marks a pivotal moment in the search wars, with generative AI emerging as the next battleground.
Any day now, a federal judge is expected to deliver a seismic ruling that could shatter Silicon Valley's most lucrative partnership. Google's $26 billion in annual search deals—$20 billion of which flows directly to Apple—hang in the balance as U.S. District Judge Amit Mehta weighs remedies following his landmark monopoly ruling against the search giant.
The stakes couldn't be higher. That $20 billion represents nearly a quarter of Alphabet's operating income and has helped determine who controls the internet for two decades. But paradoxically, some Wall Street analysts are betting that losing these deals could be exactly what Google needs to dominate the next era of search.
"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," Dan Niles, founder of Niles Investment Management, told CNBC. The contrarian thesis? Google could redirect those billions into its Gemini AI platform, transforming from an AI follower into a leader.
The antitrust case stems from Judge Mehta's August ruling that Google held an illegal monopoly in search and ads. During the trial, explosive testimony revealed just how dependent both companies had become on their arrangement. Apple Senior Vice President Eddy Cue testified that "no price in the world" would convince Apple to switch to Microsoft's Bing, even if Microsoft offered "the whole company" for free.
"I think their search engine is the best," Apple CEO Tim Cook said about Google in 2018, crystallizing why the partnership endured. But that dependency creates vulnerability. Jefferies analysts warn Apple's pre-tax profits could drop by as much as 7% if the deals disappear, while Google faces potential traffic losses and reduced predictability.
Yet the economics suggest Google's dominance runs deeper than contracts. In Europe, where regulators forced users to actively choose their default search engine after a European Commission ruling, Google's market share barely moved, hovering around 90% according to data. The pattern suggests users gravitate toward Google even when given alternatives.
