Google Wins Court Battle, Stocks Surge 8% as Judge Allows Search Engine Deal with Apple

On September 2, a federal judge in the United States ruled that Google would not be required to sell its Chrome browser or Android operating system. This decision was a significant victory for the tech giant, as it allowed Google to continue its search engine services and maintain its agreements with Apple. The court's ruling permitted Google to continue paying Apple to pre-install its search engine on iPhones, Macs, and iPads. This agreement generates approximately 200 million dollars annually for Apple. The court also prohibited exclusive contracts, mandating that Apple and other partners promote alternative search engines and offer choices across different operating systems or privacy modes. Despite Apple's default use of Google Search, users can switch to other search engines like Bing or DuckDuckGo. The ruling is part of a landmark antitrust case brought by the U.S. Department of Justice against Google's monopolistic practices. The decision allowed Google to avoid selling its Chrome browser, which was a significant relief for the company. Following the ruling, Google's stock price surged by 8% after hours, while Apple's stock price rose by 3.08%. The market's immediate reaction highlighted the positive impact of the court's decision on both companies. The ruling also indicated that while Google was found to have engaged in illegal monopolistic practices in the search domain, it would not be forced to divest its browser and Android system. This outcome was seen as a major victory for Google, as it allowed the company to continue its operations without significant disruptions. The decision also benefited Apple, as it ensured the continuation of its lucrative search agreement with Google. The court's ruling was a significant development in the ongoing antitrust battle against tech giants, setting a precedent for future cases involving monopolistic practices. The decision underscored the importance of fair competition and consumer choice in the tech industry, while also acknowledging the complexities involved in regulating powerful corporations.

This ruling comes at a critical time for Apple, which has been facing multiple challenges. The iPhone, a cornerstone of Apple's revenue, has seen a slowdown in growth, with an average annual revenue growth rate of just 2% over the past three years. Additionally, Apple's delayed entry into the generative AI field has dampened market expectations for its upcoming iPhone releases. Analysts predict that iPhone revenue growth will be less than 4% in the fiscal year ending September 2024. Furthermore, Apple is under pressure from trade tensions, with Trump publicly urging the company to move its manufacturing back to the United States, a move that would significantly increase costs. Despite a recent stock price surge, Apple's shares have declined by 2.2% year-to-date.

While this ruling is a significant win for both companies, it does not entirely eliminate their legal risks. Google continues to face other antitrust cases in the United States and Europe. Additionally, a monitoring body appointed by Judge Mehta could find that Google has not fulfilled its obligations. Apple also faces potential legal challenges, as Judge Mehta noted that the company's practices could still be scrutinized. However, this ruling provides a much-needed boost for both companies, allowing Google to shed some of the legal burdens that have weighed on its stock price and enabling Apple to maintain a significant portion of its operating profit without having to invest heavily in AI. For these tech giants, maintaining the status quo is the best possible outcome.