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Monday, October 26, 2020, 3:09 GMT
In the Internet search area, the US Department of Justice is seeking to prosecute Google for anti-competitive conduct, but this could also make Apple suffer. In order to make itself the default search engine on Apple’s iPhone and other smartphones, experts predict that Google spends US$ 8 billion to US$ 12 billion a year. This is the essence of last week’s antitrust case against Google by the US Department of Justice. This purchase is also the heart of the service division of Apple, which in the past few years has been the largest contributor to Apple’s success.
In an example, the U.S. Department of Justice used this exchange dating back 15 years to demonstrate how Google used its immense income to circumvent competition. This is a lucrative deal for Apple that shows the great importance of having more than 1 billion smartphone consumers internationally. Although the result of the case of the Justice Department is far from obvious, analysts and investors said that considering that Google’s payments accounted for as much as one-fifth of the overall income of Apple, losing the contract could do Apple serious harm. Uh, blow.
Bernstein analyst Toni Sacconaghi said: “If the case continues through to the end, Apple may experience a greater financial effect than Google.” He predicted that if Google’s contract is absolutely terminated, the stock price of Apple may decrease by as much as 20 percent. But the effect could be much lower if Apple can cover for the loss by other deals involving Google and its rivals.
Last week, as the litigation against Google was revealed by the US Department of Justice, investors seemed to be ignoring this threat, and Apple’s stock price also rose against the pattern that day. The case may take a long time to draw a decision, said Mark Stoeckle, Adams Funds’ chief executive. One of Apple’s biggest lenders is the Adams Fund. Stocker wondered whether the contract between Google and Apple was actually illegal.
What does this vary from businesses paying retail stores to have preferential shelf places for consumer goods?
In an email, Stocker said: “There is no question that it would have a negative effect on Apple if this sort of transaction stops.” But at this moment, he feels that the uncertainties facing Apple are manageable. Apple did not respond to a request for comment on the U.S. Department of Justice case, and Apple was not charged with unlawful actions by the Department of Justice. These claims were denied by Google, claiming that people choose its search engine because it is the best, not that an alternative engine can not be identified.
Kent Walker, chief legal officer of Google last week, said in a blog post that Google’s partnership with Apple is nothing special and “is no different from the arrangements traditionally used to sell apps for many other firms.”
In 2005, when Steve Jobs was still Apple ‘s CEO, the two firms first reached an agreement, and Google search was the default engine on a Mac for Apple’s Safari web browser. The partnership extended the spectrum with the debut of the iPhone in 2007. The precise terms of the deal have never been announced by the two firms. In 2016, details about Google ‘s major payments to Apple appeared in several litigation involving the search engine. In the course of the case , the court noted that Apple obtained a $1 billion payment from Google in 2014 as part of the agreement.
Analysts said that this figure has risen exponentially since then, despite variations in their calculations of individual numbers. The U.S. Department of Justice litigation found out that economists predicted that Google will pay for the deal between $8 billion and $12 billion annually, and said that this is equal to 15 % to 20% of the income of Apple. Apple announced that its profit was $55.26 billion for the fiscal year ending September 2019, and several observers estimate that this figure has grown marginally in the past year. On Thursday, the company is expected to release its fiscal year 2020 performance.
If the antitrust actions of the US Department of Justice affected the Google-Apple contract, Google would also face great threats. The filing records reveal that Apple computers accounted for almost 50 percent of Google searches last year. Analysts, like Sacknaji, speculate that Apple, also through the acquisition of DuckDuckGo, may grow its own search company to compete for advertisement revenue. DuckDuckGo is a tiny search engine that stresses anonymity, like Apple, too. While it already holds an increasingly dominant role in the search market, any such move would bring a possible powerful competitor to Google.
The partnership between Apple and Google is simply pure benefit, which helps the efforts of Apple CEO Tim Cook to shift the company’s direction, since Apple faces sluggish iPhone revenues, which account for around half of the income of the company. In the 2015 fiscal year, iPhone revenues peaked, and its revenue hit a high of $167 billion in the 2018 fiscal year. Most of Apple’s so-called services sector accounted for Google’s transactions, which rose from roughly US$ 20 billion in fiscal 2015 to an analyst ‘s estimation of US$ 53 billion in the last fiscal year.
Technology-focused senior portfolio manager Daniel Morgan (Daniel Morgan) from Apple’s main shareholder Synovus Trust said that Apple could still be able to collect some funds with several search engines paying for the placement. In Europe , for instance, Google also requires users of Android phones to select which search engine to use, despite losing a complaint against European regulators.