Google won, Apple smiled.

Google won, Apple smiled.

```

Google antitrust case verdict announced, Apple may become the bigger winner.

On September 2nd, U.S. Federal Judge Amit P. Mehta ruled in Google's antitrust case that it does not have to sell Chrome browser and, more importantly, that Google can continue cooperating with Apple on search engine services.

This not only secures Google's status as the default search engine on Apple devices but, according to reports, also provides Apple with valuable annual revenue of over $20 billion.

Previously, the U.S. government accused that these payments Google made to Apple reduced competition, as few other companies in the search engine industry could match Google's payments. But Judge Amit Mehta countered:

Prohibiting these payments would actually strengthen Google's power, since it would essentially allow Google free access to Apple's vast user base.

Therefore, the court allowed Google to continue paying Apple, as long as no exclusivity clauses were attached, theoretically providing competitors with the possibility to enter these devices. Craig Moffett, an analyst at MoffettNathanson, commented:

What Apple dodged was not a bullet, but a missile.

On Wednesday, both Apple and Google rose sharply, with Google surging over 9%, both together driving the Nasdaq to close up 1%.

Apple keeps its high-profit "cash cow"

The $20 billion Google pays each year, while only accounting for about 5% of Apple's total annual revenue, contributes much more to the company’s profits.

This is mainly because Apple's incremental cost to obtain this income is extremely low.

Data show that in the 12 months ending this June, Apple's services segment—including Google licensing payments—had a gross margin as high as 75%. In comparison, Apple's hardware business gross margin was 37% over the same period.

At this point in time, losing such a high-profit revenue stream would be a heavy blow for Apple.

The verdict comes at a crucial moment for Apple

This verdict comes at a difficult time for Apple.

The iPhone, Apple's main revenue pillar, has had an average annual revenue growth rate of only 2% over the past three years, showing signs of fatigue.

Meanwhile, due to Apple’s relatively slow development in generative AI, market expectations for the upcoming iPhone are not high.

Analysts predict that in the fiscal year ending next September, iPhone revenue growth will be less than 4%.

In addition, Apple is currently under the spotlight of trade frictions, with President Trump openly pressuring it to move manufacturing back to the high-cost United States.

Amid multiple pressures, Apple’s stock price has remained under pressure—despite a big rise yesterday, it is still down 2.2% so far this year.

Though having achieved a major victory, both companies have not completely escaped regulatory predicaments.

Google still faces other cases in the U.S. and Europe. At the same time, the supervisory agency appointed by Judge Mehta may find that Google has failed to fulfill its obligations.

Apple is not completely safe, either. Judge Mehta stated:

If the remedies imposed by the court fail to substantially restore competition, he is prepared to reconsider the payment ban.

But without doubt, this verdict constitutes a major boon for both companies.

It helps Google, which had been undervalued by investors due to legal challenges, to unload some baggage, and also allows Apple to avoid losing a large chunk of operating profit as it must invest heavily in artificial intelligence.

For these two tech giants, maintaining the current situation is already the best result.

Risk warning and disclaimerThe market has risks, investment needs to be cautious. This article does not constitute individual investment advice, nor does it take into account the individual investment goals, financial situation, or needs of any user. Users should consider whether any opinions, views, or conclusions in this article are appropriate for their particular situation. Investing accordingly is at your own risk. ```