Bank of America believes that Samsung’s reported threat to replace Google Search with Microsoft Bing across its devices could be advantageous for Apple.

Apple reportedly has a $20 billion agreement with Alphabet to make Google the default search provider on the hundreds of millions of iPhones and iPads that it sells. When it comes time to renegotiate this contract, Apple could now have more leverage with Alphabet.

“The rise of Microsoft as a potential alternative to Google gives Apple more bargaining power to better monetize what is an extremely attractive installed base of over 2 billion Apple devices,” Bank of America’s Wasmi Mohan said in a note published on Monday.

Apple reportedly paid $20 billion to Alphabet to make Google the default search provider on its hundreds of millions of iPhones and iPads.

Mohan estimates that Apple’s current revenue-sharing agreement with Alphabet provides the iPhone manufacturer with approximately 80% of the mobile traffic acquisition costs generated by its massive user base’s search queries. Apple has long derived billions of dollars annually in high-margin revenue from this contract.

Mohan stated, “Apple’s longstanding relationship with Google has resulted in an attractive, low-risk revenue and profit stream for Apple.”

Apple could renegotiate with Alphabet for improved terms or even consider switching to Bing when its current contract expires if Microsoft grows Bing with OpenAI’s ChatGPT.

Mohan stated that renegotiation would entail obtaining a greater amount per search.

If Apple were to seriously consider making Bing the default search engine on its devices, however, it would expose the company to risks.

According to the note, if users decided to change the default search engine on their iPhones from Bing to Google, the volume of searches that generate high-margin revenue for Apple would decrease.

“A higher rate per inquiry may not compensate for the decline in search market share. Microsoft may find it difficult to compete for the contract if Google is able to monetize search at a much higher level, as Mohan explained.

Mohan reaffirmed his “Neutral” rating and $168 price target for Apple, which represents a 1% potential upside from current levels.

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