Google Avoids Breakup as Judge Cites Generative AI Competition

A US federal judge has rejected the DOJ's request to break up Alphabet's core businesses, citing the rise of generative AI and ChatGPT's growth to 700 million weekly users. The ruling highlights how AI has reshaped the competitive landscape, undermining the DOJ's antitrust case. Analysts cheer the decision, while Sen. Elizabeth Warren calls it a "slap on the wrist."

A US federal judge has rejected the Department of Justice's (DOJ) request to break up Alphabet's core businesses, citing the rise of generative AI and ChatGPT's growth to 700 million weekly users. The ruling highlights how AI has reshaped the competitive landscape, undermining the DOJ's antitrust case. Alphabet shares jumped 6% in premarket trading on Wednesday, as the company was spared from a forced breakup in an antitrust case.

Judge Amit Mehta ruled that Google violated antitrust laws but declined to order a breakup, allowing Alphabet to retain control of its Chrome browser and Android mobile operating system. The judge also barred certain exclusive contracts with device makers and browser developers, but Google can continue making payments to partners such as Apple to feature its search engine. The decision preserves Alphabet's ability to deepen its partnership with Apple and potentially integrate its Gemini AI into future iPhones.

Analysts have cheered the decision, with MoffettNathanson analysts describing it as a "home run for the status quo." They noted that Alphabet had traded at a discount to peers amid fears of a forced divestiture, and the ruling lifts a key regulatory overhang that had weighed on the company's valuation.

Shares of Apple also rose 2.6% premarket, reflecting the positive impact of the ruling on Alphabet's partnership with Apple. Alphabet shares are up nearly 11.7% year-to-date, outperforming Amazon but trailing Meta and Microsoft.

The DOJ sued Google in 2020, alleging it illegally maintained a monopoly in search through exclusionary deals with device makers and browser developers. However, the rise of AI tools like ChatGPT was cited as emerging competition, leading Judge Mehta to decline a breakup.

References:
[1] https://economictimes.indiatimes.com/tech/technology/alphabet-shares-jump-as-us-court-ruling-eases-antitrust-concerns/articleshow/123673686.cms
[2] https://www.reuters.com/sustainability/boards-policy-regulation/alphabet-shares-jump-us-court-ruling-eases-antitrust-concerns-2025-09-03/