Apple Warns Investors About Risk of Massive Deal With Google Ending

[MacRumors]

On its quarterly earnings calls, Apple provides informal financial guidance that helps set expectations for investors and Wall Street analysts. On its latest earnings call yesterday, however, Apple mentioned something that it had not before.

Specifically, Apple's CFO Kevan Parekh said that the company's September quarter revenue outlook was contingent on Apple's revenue-sharing agreement with Google continuing. As noted by Jason Snell at Six Colors, this is seemingly the first time Apple has directly referred to the threat of losing this revenue within its prepared remarks.

Here is what Parekh said, with emphasis added:

As we move into the September quarter, I'd like to review our outlook, which includes the types of forward-looking information that Suhasini referred to. Importantly, the color we're providing assumes that the global tariff rates, policies, and application remain in effect as of this call, the global macroeconomic outlook does not worsen from today, and the current revenue-share agreement with Google continues.

Google reportedly pays Apple billions of dollars per year to be the default search engine in Safari across the iPhone, iPad, and Mac, with a court document revealing that Google paid Apple a whopping $20 billion in 2022 alone.

In August 2024, a U.S. federal judge ruled that Google's default search engine agreement with Apple violated antitrust law. However, the court has not yet issued any remedies, and Google will almost certainly appeal any unfavorable decision.

"I don't really want to speculate on the court ruling and how they would rule and what we would do as a consequence of it," said Apple CEO Tim Cook, on the earnings call.

Article Link: Apple Warns Investors About Risk of Massive Deal With Google Ending

 

[turbineseaplane]

Good.

I'd like Apple to get out of bed with Google, just on principle.

 

[Digital Dude]

I rarely use Safari or Google and prefer duck-duck anyway. 🤷‍♂️

 

[FSMBP]

I hate how Google has become...When I search in Safari, I'm instantly prompted with a SIGN IN to my Google account (to get best results or some garbage). And either way, the top hits are AI slop.

DuckDuckGo is now my default.

 

[turbineseaplane]

I rarely use Safari or Google and prefer duck-duck anyway. 🤷‍♂️

Kagi person myself.
Love it!

Could never go back.

 

[Lounge vibes 05]

Good.

I'd like Apple to get out of bed with Google, just on principle.

completely agree, and I think users should be presented with a “choose your search engine” screen at first launch of Safari.
most people will likely still choose Google, but it’s always been very strange how that is just the default.

 

[omarjanak]

Apple’s $20B deal with Google is under threat from antitrust rulings. If it ends, Apple could lose major revenue—but may build its own search engine or find a new partner. Big changes could be coming.

 

[oldoneeye]

Good, perhaps some money will go to creating a more competitive search market

 

[Trebora]

Uh, what do you think that will do to the value of their company and thus their stock?

 

[WarmWinterHat]

They should have warned them by telling investors that it was happening to begin with instead of pumping service $$ with it..aka, lying about service revenue.

I'm glad to see it ending. It's payola.

I moved to DDG some time ago.

 

[sunapple]

If Apple could choose: user privacy or money, what would it be? Oh wait that decision was made a long time ago. Their marketing department must not be aware huh.

 

[turbineseaplane]

They should have warned them by telling investors that it was happening to begin with instead of pumping service $$ with it..aka, lying about service revenue.

I'm glad to see it ending. It's payola.

This is a very fair and accurate point.

 

[BGrifter]

Sounds like a good time to switch to a search engine that actually searches instead of vomiting AI nonsense. Google search is rapidly becoming useless.

 

[TheDailyApple]

I originally switched to DuckDuckGo years ago for privacy, but I started appreciating it over Google for its cleaner results alone. Unfortunately DuckDuckGo has became more bloated recently too. Is it too much to ask for a simple list of webpages? If I want to search products, images, or news, I'll use those tabs. If I want to search videos I'll use YouTube. But if I'm doing a simple web search all I want is a simple list of webpages with nothing else mixed in.

Turns out you can still view a simple list of web pages on Google by selecting "More" on the search category menu and selecting "Web." Should be default.

 

[dynamojoe]

Uh, what do you think that will do to the value of their company and thus their stock?

Depends on which company you're asking about. It'll hurt Apple to the tune of $20B, but it obviously is a money maker for Google or they wouldn't pay it. So they'll get hurt too. Other search engines stand to benefit from greater user count.

I set all my personal devices and browsers to DuckDuckGo for search and so far I haven't noticed any serious problems.

 

[TheDailyApple]

The feature I want most out of a search engine these days is the ability to filter out all the AI generated crap content. Many popular searches (like "ChapGPT vs Gemini") produce a slew of obviously AI generated content from no-name sites gaming the SEO algorithms.

 

[deathcab]

Apple’s $20B deal with Google is under threat from antitrust rulings. If it ends, Apple could lose major revenue—but may build its own search engine or find a new partner. Big changes could be coming.

I think this goes directly to one of the potential arguments about why the pay-to-play arrangement could be viewed as anticompetitive: by paying Apple, they're effectively disincentivizing one for the largest tech companies in the world from entering their market with a competing search product.

I for one would love to see Apple build a search product similar to Kagi & offer it as a stand alone paid product, potentially with some basic tier available to iOS devices / Safari clients for free (and/or bundled into iCloud like private relay and hide my services are).

 

[I7guy]

Good. I would like googles appeal to succeed.

 

[I7guy]

If Apple could choose: user privacy or money, what would it be? Oh wait that decision was made a long time ago. Their marketing department must not be aware huh.

Apple chooses both. How do you figure it’s either or?

 

[minik]

Personally I use Bing for many years now. Google is mainly for YouTube but I also have their Google Fi service as my second line. Google search result has never been my favorite and the sign-in with Google pop-up is annoying.

 

[ProbablyDylan]

Makes me wonder what'll come of this. Apple just gonna leave Google the default search for free?

Really wish Safari gave the option to use any arbitrary engine, not just the 5 or so Apple allows. Kagi is incredible.

 

[capekim]

I use Duck and yes would like to see Apple get out of bed with Google. How do you have privacy first marketing around your products but let Google be your default? Apple customers need a privacy focused search as the default.

 

[SanderEvers]

The point is, this money (BILLIONS per year) is used for software development. If / when this goes away, most software will change drastically. And, for example, iOS and MacOS might no longer have free upgrades and browsers like Safari will become paid apps or they will add a lot of advertisements.

Free software doesn't exist. Only paid and subsidised software. And if this Google deals falls away, "subsidised" will become very difficult.

 

[WarmWinterHat]

The point is, this money (BILLIONS per year) is used for software development. If / when this goes away, most software will change drastically. And, for example, iOS and MacOS might no longer have free upgrades and browsers like Safari will become paid apps or they will add a lot of advertisements.

Free software doesn't exist. Only paid and subsidised software. And if this Google deals falls away, "subsidised" will become very difficult.

Apple's profit last fiscal year was $93.7 billion. This is $20 billion. Profit is money not used by the company, so no, it's not for development; it's used to pad their profits.

Additionally, this money was pushed into the services revenue category. It pumped services and made it look more profitable that what it actually is. In other words, Apple has been lying.

 

[aapl owner]

This is a very fair and accurate point.

This is a really bad suggestion. So you think Apple should lie to its investors? This is unethical and illegal.