Google is ‘very likely’ to be barred from paying billions of dollars each year to Apple to ensure its search engine is enabled by default on iPhones after its stunning loss to the Justice Department in a lawsuit historic antitrust, according to Jefferies analysts.

Judge Amit Mehta ruled in August that Google has an illegal monopoly on online search and specifically called the company’s habit of dropping checks a default — including $20 billion for Apple alone. ‘in 2022 – of anti-competitive tactics. The judge is expected to announce solutions by next summer.

“A very likely rectification would be to prohibit GOOG from paying AAPL to be the exclusive search engine on iPhone,” Jefferies analysts said in a note to clients Wednesday.

Jefferies estimates that Apple earned $25 billion in payments from Google in fiscal 2024, which would equate to 20% of the iPhone maker’s pretax profit.

Still, any impact on Google and Apple’s bottom line is likely far in the future. Google has already said it will appeal Mehta’s initial ruling in the search lawsuit, while CEO Sundar Pichai warned the legal battle would take “years” to resolve.

The final outcome “could take between three and eight years for the final settlement to be decided based on precedent,” Jefferies analysts said.

“Additionally, while an exclusive agreement is unlikely to be permitted, the DoJ cannot prevent GOOG from entering into a revenue sharing agreement with AAPL, as long as it is not a proprietary and that AAPL would allow users to choose other search engines. of,” adds the note.

In a document filed last week, the DOJ said it plans to ask Mehta to order the dismantling of Google’s empire by divesting assets such as its Chrome browser, its Google Play app store or its Android operating system.

The judge could also force Google to stop paying smartphone makers like Apple and carriers like AT&T, or require Google to share relevant search data, indexes and models with its competitors.

Google responded, calling the DOJ’s appeal framework “radical” and saying its proposals went “far beyond the legal issues specific to this case.”

“Government overreach in a rapidly changing industry could have unintended negative consequences for American innovation and American consumers,” Lee-Anne Mulholland, Google’s vice president of regulatory affairs, said in a blog post. “We look forward to making our case in court.”