Why Google's Antitrust Case is Becoming Apple's Problem

As U.S. antitrust regulators circle Google, Apple has redoubled its efforts to develop its own technology in the coveted area of search.

In the latest updates to iPhone operating systems, Apple now shows its own search results and links directly to websites when users input queries from its home screen.

This shows advances in Apple's in-house development and could be the building blocks for a more comprehensive attack on Google's dominance, alongside what's currently going on in the halls of power.

The move bolsters the evidence that Apple could be working to build a rival to Google's search engine, according to the Financial Times.

This, however, could be a problem for profit.

On October 20, the Department of Justice filed an antitrust suit against Google, alleging that it had become a "gatekeeper" to the internet and that it had abused its position to prevent the rise of competitors.

Officials were also wary of Google's agreements with Android, where it had required its search tools to come preloaded on devices from those using the operating system.

Other smartphone providers, such as Huawei, have also had a crack at creating their own search engines. Its newly developed "Petal Search" is a swipe at Google as the default search tool.

Google's control of around 80 percent of the U.S. search market is too much, antitrust officials have said. The remaining 20 percent share isn't enough to gain enough of an audience for growth, which would mean real competition.

The DOJ's argument revolves around the fact that consumers have few other options for search, while advertisers are left with less choice, too.

Despite the fact this is primarily a case against the search giant, it could have strong repercussions for Apple.

Google pays Apple an estimated $10 billion per year to be the default search engine on its devices. Google, meanwhile, sees an approximate 50 percent of searches coming from Apple products.

As hardware growth cools off in the market, retaining these kinds of deals is crucial for Apple's margins. The payments are profit.

Apple's financial results are due to be released for the quarter tomorrow and will give an indication on whether hardware sales are continuing to slow. Previous financial releases have shown that throughout this fiscal year, Apple's profits have leaned on services, which grew five times as fast as hardware.

"Apple's search development is hugely ambitious target, and it's going to be difficult for it to catch up with Google. However, it has a huge cash pile so it can plough in those resources," says Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown told Newsweek.

"There's only so many iPhone or iPad upgrades you can order, so services will be a key area."

Streeter believes in the future, Apple may look to gain revenue from bundling services and streaming.

Under Forbes' estimates, if the Google search deal were cancelled, revenue from services would fall by around 22 percent. This would bring total revenue down 4 percent.

Google pointed to an extensive public blog written by Kent Walker, the company's SVP of global affairs in response. The blog calls the DOJ's complaint "dubious" and "deeply flawed", saying that "people use Google because they choose to, not because they're forced to, or because they can't find alternatives."

Addressing the Apple partnership, it points to the fact that "competitors Bing and Yahoo! [also] pay to prominently feature" and that changing your search engine on Safari is "easy".

Apple had not returned requests by Newsweek for comment at the time of publication.

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The new iPhone 12 and iPhone 12 Pro on display during launch day on October 23, in London. The iPhone 12 Mini and iPhone 12 Pro Max will be available from November 13. Ming Yeung/Getty Images