Google achieved a significant legal victory on Tuesday when a US judge dismissed demands from prosecutors for the tech company to divest its Chrome browser and Android operating system. Instead, the court mandated that Google share specific search data with its competitors, a move intended to enhance competition in the online search sector. This ruling, issued by US District Judge Amit Mehta, led to a nearly 8 percent surge in Alphabet’s stock during after-hours trading, alleviating ongoing concerns regarding a potential breakup that could have significantly impacted Google’s business model. Although the required data-sharing may strengthen Google’s rivals, analysts believe it will not pose an immediate challenge.
Deepak Mathivanan, an analyst at Cantor Fitzgerald, remarked, “It will take a longer period of time for consumers to also embrace these new experiences.” Following the ruling, neither the Department of Justice (DOJ) nor Google provided comments. For investors, the decision to avoid selling off Chrome or Android was particularly crucial, as both platforms are integral to Google’s ecosystem, which fuels advertising and mobile engagement. The ruling also reassured Apple and other device manufacturers, confirming that they can continue to receive substantial revenue-sharing payments from Google for keeping its search engine as the default option. Analysts at Morgan Stanley previously estimated that Google pays Apple approximately $20 billion each year for this deal.
Additionally, the judge’s ruling facilitates the preloading of competing apps by device makers, creating a more equitable competitive environment. This case highlights a significant moment in a five-year legal battle between Google and US prosecutors. Last year, Judge Mehta found that Google possesses an illegal monopoly in online search and advertising, paving the way for this remedies phase. During the trial in April, the Justice Department sought extensive measures, including structural changes such as divesting Chrome and Android, arguing that these steps were necessary to limit Google’s dominance, particularly as the company expands into artificial intelligence. Google countered that such demands were excessive and could jeopardize its technological advantage.
CEO Sundar Pichai testified that the data-sharing requirements might enable competitors to reverse-engineer Google’s proprietary systems. Judge Mehta struck a compromise in his ruling, opting not to grant the full extent of disclosures sought by prosecutors and emphasizing that competitors still face significant challenges. He noted, “This remedy requires only disclosure of underlying data; it will be up to [the competitors] to engineer the technology and develop the infrastructure to make use of it.” Despite this victory, Google’s legal troubles are not yet over, as it is set to face another trial later this month regarding its dominance in online advertising technology, following a previous ruling that declared Google holds illegal monopolies in that area.
The company is also contesting a ruling favoring Epic Games that necessitates changes to its app store practices. The DOJ’s cases against Google are part of a broader bipartisan effort to regulate Big Tech, a movement that originated under President Donald Trump and now includes inquiries into Meta Platforms, Amazon, and Apple. For the time being, Google’s narrow avoidance of a forced breakup brings relief to shareholders and serves as a reminder that its dominance, although under scrutiny, remains largely unaffected.