Apple unlikely to see immediate impact from Google losing antitrust case: analyst

Yesterday’s news that Google (NASDAQ:GOOGL) (GOOGL) was ruled to be considered to be a monopolist in the search market is unlikely to impact Apple (NASDAQ:AAPL) much in the short-term, several Wall Street firms said.

Apple shares fell 0.8% in premarket trading.

Bernstein analyst Toni Sacconaghi, who has an Outperform rating and $240 price target on Apple, said the ruling is unlikely to impact the estimated $20B in annual payments Apple receives from Google as a final resolution is “years away.”

Sacconaghi said it’s likely that Apple is forced to institute a choice screen for the search engine for its Safari web browser and potentially have a “similar” take rate as it does today from Google, at roughly 36%.

Additionally, Apple could wind up introducing its own search engine as a choice, which Sacconaghi said could ultimately wind up being accretive to the company.

Bank of America analyst Wamsi Mohan agreed with Sacconaghi and said there is unlikely to be any immediate impact to Apple and the ultimate financial impact may be “limited,” as any appeal from Google could take a long time.

Mohan reiterated his Buy rating and $256 price target on Apple.

Citi analyst Atif Malik said the ruling could be a negative for Apple, but given that Judge Amit Mehta did not mention anything about remedies, any impact is unlikely at this time.

Additionally, Apple’s efforts in artificial intelligence, a revamped Siri and the partnership with OpenAI’s ChatGPT “could partly steer consumers away from web search,” Malik, who reiterated his Buy rating and $255 price target on Apple, added.

Morgan Stanley analyst Erik Woodring, who has an Overweight rating and $273 price target on Apple, said the Tim Cook-led company could see a hit to earnings per share between four and six percent if the exclusive deal between Apple and Google is negated; but there’s also a path to upside.

“We presume that Apple has considered the negative ramifications of this DOJ ruling for quite some time, and as a result, we believe it has mapped alternative monetization paths in the event the Google exclusivity provision is eliminated,” Woodring wrote in an investor note.

“These paths include (but are not limited to): introduce a choice screen in Safari and force global search vendors to competitively bid for favorable positioning (better positioning, better economics for Apple); renegotiate with Google and other search partners to collect better variable economics (i.e., allow search vendors to bid for placement in search access points, similar to retailers bidding for shelf space); and within Apple Intelligence, structure search contracts to collect TAC through new methods of voice-based search.”