Analysts at Jefferies say it’s “very likely” the U.S. Department of Justice will ban Google’s longtime search deal on iPhones, a decision Jefferies predicts could sink Apple’s stock by as much as 11%.
Google has been at the center of the biggest antitrust trial in decades, as the DOJ questions practices that have kept the search engine front and center on smartphones and web browsers. Google has paid billions to Apple and others annually to have a prominent spot on devices up until now, but Jefferies analysts on Wednesday predicted the DOJ would ban those deals in the future as it tries to break up any search monopoly. Jefferies estimates the $25 billion deal makes up 20% of Apple’s pretax profit, or about 6.3% of total revenue, representing an 8% to 11% hit on share prices.
