Analysts at Evercore ISI provided their thoughts on what they learned from the Alphabet (NASDAQ:GOOGL)/DOJ trial in a note Tuesday.
The evidentiary portion of the Google vs DOJ legal battle has concluded and, Evercore said that while much of the evidence and testimony was behind closed doors, "there were some interesting details disclosed during the public part of the trial."
During the trial, It was disclosed that Google paid $26.3B to Apple (NASDAQ:AAPL) and others for default search placement in 2021. Evercore thinks "the majority of this went to Apple."
"We now estimate that Apple earns $18-20B from the Google relationship vs our prior estimate of $12-15B," the analysts stated. The firm also noted that it was disclosed that Google pays Apple 36% of the revenue it earns from Safari search traffic.
The next step for the case will be closing arguments, which are scheduled for May 1 to 3, 2024. After that, the judge will issue a ruling.
If Google is found to have violated antitrust law, then the potential penalties could range from ordering greater transparency in the negotiating process to a break up of Google (very unlikely), explained the analysts at Evercore.
"The potential punishment that would have the greatest impact on Apple would be for the judge to forbid the payment for default search placement arrangement. Assuming Apple earns $19B/year from the Google deal, this would imply ~17% of Apple's net income is at risk if the judge rules the deal is anti-competitive behavior," they added.
Analysts at Evercore estimate it will likely be nine to 12 months before there is a ruling from the judge, which would be followed by a second trial and a lengthy appeals process, so it could be multiple years before this case is fully settled.
Even so, the firm continues to think Google has a stronger case.