JPMorgan sees $12.5B of Apple sales at risk from Google case

JPMorgan estimates Apple (AAPL) receives $28B globally per year from Alphabet (GOOGL) (GOOG) (GOOG, GOOGL) for Google traffic acquisition costs, of which $12.5B is for the payment of traffic generated from U.S. customers. JPMorgan weighs the implications for Apple from the remedies that are expected to be announced for the Department of Justice versus Google case relative to Google’s monopoly in search. The DOJ’s remedies, prohibiting Google from making payments for distribution, is a worst-case for Apple which would stop the $12.5B Apple receives from Google for U.S. traffic, the analyst tells investors in a research note. The firm sees a 10% earnings hit for Apple in this scenario. However, under Google’s proposed remedies, JPMorgan sees only “modest changes at best by largely maintaining the current status quo.” It sees an “opportunity for a potential middle ground” between the two remedies and keeps an Overweight rating on Apple shares.