Judge Rules Google Won't Divest Chrome, Android; Stocks Surge

In a significant development, a federal judge in Washington, Amit Mehta, has ruled on the remedies in the antitrust case "United States v. Google." The decision stipulates that Google does not need 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 on Apple devices. However, Google is required to share some search index data with competitors to foster competition in the online search market. The ruling also prohibits Google from entering into exclusive distribution agreements for Google Search, Chrome, Google Assistant, and Gemini applications.

These measures are seen as creating space for emerging AI search services like 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 upcoming trial will determine the remedies for this case. 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 like Meta Platforms, Amazon, and Apple.

Judge Mehta had previously ruled in August 2024 that Google maintains a monopoly in general search services and text advertising. However, the rise of generative AI has altered the course of the case. The judge acknowledged that while generative AI was not seen as an immediate threat to search engines during the liability phase, it has become a central issue in the remedies hearing, viewed as a potential competitive challenge. Over the past year, the rise of AI chatbots like ChatGPT and Perplexity has led to a decline in traditional internet search traffic.

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