Google antitrust ruling clears the way for Apple’s Gemini push

Whirlwind deserves an increase.

As manager to supervise the Apple services division, it is very encouraged to protect the tens of billions of dollars per year that Google pays to be the default search engine in Safari. “I lost a lot of sleep while thinking about it,” he said in the stand of the witness during the Google antitrust test earlier this year.

Fortunately for Cue, his testimony of court seems to have had a significant impact on the judge Amit Mehta, who ruled this week that the default payments of Google in Apple and others can continue. You can see the arguments of the trial reflected in Mehta’s decision: Apple’s main vice-president said that it would be “crazy” to punish the iPhone manufacturer by restoring Google’s ability to pay default status, and that the rise of IA companies were doing the research market anyway. In an attempt to minimize the importance of the Apple and Google agreement, CUE went so far as to say that Google research in Safari decreased for the first time, which temporarily dropped the course of Google’s action.

These are the exact arguments that Mehta finally made in her decision. He recognized that default payments continue to “shape the general research services market in favor of Google”, but that ban would have “paralyzing” downstream effects on the recipients of these payments. A specific effect he cited was “less products and less innovation of Apple products”, one of the richest companies in the world. (It is estimated that Google at Apple’s payments represent approximately 15% of its annual profit.)

Mehta cited the rise of AI generating companies like Openai and Perplexity as proof that there is finally competition on the research market. “The money flowing in this space, and how fast it has happened, is surprising,” he wrote. “These new realities give the court hope that Google will not simply overcome competitors for the distribution if superior products are emerging.”

As Mehta knows, the reality of Google and Apple’s financial relationship is much more complicated than that. Google has historically paid Apple a percentage of advertising revenues that it wins via Safari. This aligns incentives between two of the most powerful societies on the earth, both of which shared in the increase in this arrangement during the best of two decades.

It is probably not a coincidence that, just after the release of Mehta’s decision, the news announced that Apple now collaborates with Google to have potentially gemini power the AI ​​search engine that he develops for Siri. Apple’s leaders have been talking about the integration of gemini in iOS for over a year, but have retained themselves for obvious optical reasons. The American government has just given them to proceed.

“This result is a circuit for the status quo, and the status quo has been very favorable to Google and Apple,” the research company on technology and the media Moffettnathanson in a note in its customers this week. “We do not suggest that the future of research or devices is now free from competitive threat, but this decision allows the future transition to take place according to their conditions rather than a disruptive and damaging judgment.”

Apple and Google’s search agreement should have been canceled, and perhaps it will always be if Apple ends up getting its turn under the antitrust projectors. I have spoken with many rivals of research on Google potential over the years which have indicated the agreement as a key factor in stifling competition. You might say that no agreement had a greater impact on Silicon Valley during the long arc of time, in fact. The most sinister aspect is that it has allowed the two companies that already control how most people access the Internet to become richer and more powerful together.

The relationship authorized to continue now opens the land so that Apple and Google extend their common domination at the age of AI. Apple is late on the AI, but remains a powerful source of distribution for Gemini via iPhones, iPads and Macs. With Google’s research payments that continue to ride, why should Apple acquire a startup like Mistral or Perplexity to play the catch-up? It is already paid to work with one of the main companies in AI in the world and now has carte blanche to forge deeper links.

This week’s decision also puts Openai’s Distribution Agreement with Apple for Chatgpt in a difficult situation. I am sure that Apple likes to have an optionality, but that will not endanger the Google relationship with research money. Openai does not have an advertisement trade yet to give Apple a competitive cup, either. Despite what Mehta thinks, it is difficult to imagine that another company can exceed Google’s default payments with a higher product (sorry, Microsoft). All of this leaves Google and Apple where they have always been: two de facto monopolies nourishing each other at the expense of everyone.

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