Google Avoids Divestment, Stocks Surge 8.4% After Antitrust Ruling

On Tuesday, a federal judge in Washington, D.C., issued a ruling in the antitrust case "United States v. Google," outlining the remedial measures to be taken. The judge, Amit Mehta, determined that Google would not be required to divest its Chrome browser or Android operating system. Additionally, the court rejected the prosecution's request to prohibit Google from paying Apple to ensure its search engine remains the default option on Apple devices, although the court reserved the right to revisit this arrangement in the future. Google was also not barred from paying distribution partners to pre-install Google Search, Chrome, or its generative AI products.

However, Google is mandated to share certain search index data with competitors, thereby opening up the online search market to increased competition. The company is also prohibited from entering into exclusive distribution agreements involving Google Search, Chrome, Google Assistant, and Gemini applications. These restrictions are intended to create space for emerging AI search service providers, such as Perplexity and OpenAI.

Notably, Google is set to face another antitrust lawsuit from the U.S. Department of Justice in September, where a judge has already ruled that Google holds an illegal monopoly in the online advertising technology sector. The decision on remedial measures in this case is pending. The two lawsuits against Google are part of a broader bipartisan effort to crack down on large tech companies, an initiative that began during the first term of the Trump administration and includes other giants such as Meta Platforms, Amazon, and Apple.

In August 2024, Mehta had already ruled that Google maintains a monopoly in general search services and text advertising. However, the judge's decision emphasized that the rise of generative AI has altered the course of the case. The ruling stated, "The emergence of GenAI has changed the trajectory of this case." Over the past year, the rise of AI chatbots like ChatGPT and Perplexity has led to a decline in traditional internet search traffic. During the liability trial, no witnesses considered GenAI an immediate threat to search engines. However, during the remedial measures hearing, GenAI was placed at the core, seen as a potential competitive challenge.

Following the announcement, the stock price of Alphabet, Google's parent company, surged by 8.4% in after-hours trading. The market interpreted the ruling as "all bad news is out," with the restrictive measures being much less severe than previously anticipated. Apple, which has a search distribution partnership with Google, also saw its stock price rise by 3.6%.