Google's defeat in an antitrust case brought by the Justice Department casts a shadow on its partner Apple Inc., which receives annual payments of around $20 billion from the Internet search engine giant.

Apple shares fell nearly 5% on Monday after a judge ruled that Google's payments to device makers – in exchange for preferential placement of its search engine – were illegal. The ruling gave the Justice Department a victory in its first major antitrust case against Big Tech in greater than twenty years.

For Apple, this move jeopardizes a source of income that has contributed to higher sales in recent times. But the iPhone manufacturer has already broken away from its dependence on traditional Internet search engines like google. Apple is redesigning its digital assistant Siri to process queries even higher and is integrating AI chatbots into its software. The company is betting that AI technology will eventually gain the upper hand.

This underscores the federal government's battle with the technology industry: it’s moving so fast that by the point a serious reckoning comes, the industry is already busy reorganizing itself for the subsequent innovation.

Apple is integrating OpenAI's ChatGPT features into its software and plans to do the identical with Google's chatbot Gemini. Over time, the corporate may steer consumers toward AI and Siri reasonably than the online browser.

That would give Apple the power to enter into recent, non-exclusive agreements with AI vendors – including Google – that don't run afoul of the U.S. government. Still, it’s going to likely be a few years before Apple makes serious money from AI.

The decision is not any picnic for Google, considering how much money the corporate paid Apple to make the corporate's search engine the default option.

“In the short term, it could actually save them a lot of money,” says Ari Paparo, an promoting entrepreneur who previously worked at Google.

Monday's decision didn’t specify how Google could satisfy the federal government, but Judge Amit Mehta has scheduled a hearing for next month to debate the timing of a separate trial on the problem. It's unlikely the court could force Apple to drop Google as a search partner altogether as one in all the remedies, but it surely could potentially change the terms of the agreement — and create a level playing field.

One theoretical scenario can be that Apple would suggest different search engine options to consumers after they first activate their recent device. Such a system could work similarly to a menu on Apple devices within the European Union that presents a alternative of web browsers.

This approach would still leave Google as an option, but customers could also select alternatives like Microsoft Bing or DuckDuckGo. Currently, users must undergo the iPhone Settings app to vary their default search engine.

In his decision, Mehta said that the lucrative contract with Google prevented Apple from launching its search engine, “even though the company has otherwise built the capacity to do so.”

John Giannandrea, a former Google executive who heads up Apple's AI division, has his own search team working for him, but they've focused more on the search features in Apple's software than on the power to perform Google-style web queries.

Still, Apple's user interface is about to vary in the approaching months. The company will introduce Apple Intelligence, its recent suite of artificial intelligence features that would ultimately change the best way people use their iPhones and other devices.

The changes include a brand new “Type to Siri” approach that makes it easier to make use of the virtual assistant without having to talk to it, allowing users to send requests to AI engines from anywhere within the iPhone, iPad or Mac operating systems.

Originally published: August 6, 2024 at 11:22 am