Bitcoin price today: surges to $122k, near record high on US regulatory cheer
Investing.com -- The U.S. Department of Justice is expected to issue its long-awaited remedy ruling in the USA v. Google antitrust case "any day," with implications reaching far beyond Alphabet (NASDAQ:GOOGL), notably to Apple (NASDAQ:AAPL), according to Morgan Stanley (NYSE:MS).
Although Apple is not a party to the case, Morgan Stanley said the ruling “will provide clarity on the future of the $20B+ payments that Apple collects annually from Google” for search engine placement on its devices.
Morgan Stanley analysts said their base case is that Judge Mehta will “restrict Google search exclusivity with Apple,” but still allow Google to pay Apple for traffic acquisition, a scenario similar to the EU’s existing “choice screen.”
This outcome would imply “just 2% EPS downside” for Apple in 2027, according to the bank.
The worst-case scenario, according to Morgan Stanley, would see Google barred from paying Apple altogether, leading to more than 10% downside to Apple’s 2027 EPS and the company’s shares “likely re-testing its April lows.”
The most extreme scenario, Apple launching its own search engine, is seen as highly unlikely, with Morgan Stanley citing internal filings that “make clear Apple does not intend to launch its own search platform.” But if forced, this could trigger “over 20% downside to FY27 EPS.”
Any remedy is likely to be appealed, meaning changes would take “multiple years,” the analysts noted. Still, a ruling now would help “remove a key valuation overhang” for Apple, said Morgan Stanley.