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Investing.com -- Apple shares are up 3.9% premarket on Wednesday after U.S. District Judge Amit Mehta issued remedies in the Google antitrust case that analysts described as highly favourable for the iPhone maker.
Morgan Stanley said in a note Wednesday that the ruling was “a near best-case scenario” for Apple, adding that the company “can still collect TAC payments from GOOGL (with conditions) and can renegotiate the default search socket annually.”
Analysts wrote that the decision is “better than our prior ‘Scenario 4’ framework & likely resulting in an immaterial, to potentially positive, financial impact.”
The ruling bars Google from maintaining exclusive contracts for Search, Chrome, Assistant and Gemini, but allows it to continue making payments to distribution partners.
“In layman’s term, this means that Google can no longer be Apple’s exclusive and default search partner for multiple years, but that Apple can continue to collect traffic acquisition payments from Google (and others) to distribute search,” Morgan Stanley said.
These payments represent a “$25B+ annual revenue business for Apple, with 95%+ margins.”
The bank concluded: “The bottom line — this is a near best-case scenario for Apple and should be a clearing event for the stock.”
Morgan Stanley added that the financial effect will likely be “negligible, and perhaps even positive,” since Apple can now renegotiate rates annually and has the option to introduce a search choice screen if it wishes.
The firm also noted: “Apple is ‘actively looking at’ adding a GenAI product as a search option in its Safari web browser and expects to do so in the coming year.”
Bank of America echoed the view, calling the ruling “a win for Apple” and raising its price objective to $260, citing increased confidence in Services growth.
“In our opinion, the substance of this remedy already exists today where Apple has Google as the default search engine, but also allows users to change that default to some other search engine in settings (choice screen not mandated),” wrote BofA.