Shares of Google parent Alphabet surged to a record high after a federal judge issued a more favorable ruling than expected on remedies in the U.S. government's antitrust lawsuit involving the tech giant's internet search business. Apple stock also advanced as the judge took into account an increasingly competitive search landscape spurred by generative artificial intelligence.
Federal judge Amit Mehta ruled late Tuesday that Google can keep its Chrome browser. While the internet giant will be barred from exclusive search contracts and must share search index data with competitors, Mehta didn't bar Google from making payments to third parties for default browser placement. However, new agreements will be limited to last no more than one year.
Emerging competition in the internet search business amid the rise of generative artificial intelligence may have played a role in Mehta's ruling, observers say. Google faces new rivals in OpenAI, Perplexity and others.
AI Emerges In Antitrust Ruling
"There is more discussion of AI in the opinion than in the entire case until now," said Herbert Hovenkamp, a professor at the University of Pennsylvania's Carey Law School. "I think that's wise. Judge Mehta is aware of the great uncertainty that AI throws into the mix, and as a result it's not good to do something radical such as a breakup."
Wall Street analysts were upbeat on the ruling.
"While in theory Google is barred from 'exclusive deals' for search this now lays the groundwork for Apple to continue its deal and ultimately likely double down on more AI related partnership with Google Gemini down the road," said Wedbush analyst Daniel Ives in a report. "We now see a green light for a bigger Gemini AI partnership between Apple and Google with this DoJ case now in the rear view mirror."
Will Google Still Appeal?
In a 2024 ruling, Mehta declared Google a monopolist in internet search. Mehta ruled that its parent Alphabet illegally maintained a monopoly over online search services and prevented rivals from developing their own products.
The Department of Justice had asked Mehta to order Alphabet to sell its Chrome browser. Mehta also had the option of ending Google's right to be the exclusive search engine on Apple's Safari browser, or forcing Google to share its search data with rivals such as OpenAI, Perplexity and others. Alphabet pays Apple over $20 billion annually to make Google the default search engine on iPhones.
Google could appeal the 2024 ruling as well as Mehta's remedies decision.
In terms of data-sharing, Google must provide "qualified competitors" with a one-time snapshot of its crawled web search index and, on a periodic and capped basis, anonymized user interaction datasets.
"This reasoned opinion takes a middle path between the proposals of the two sides: it goes beyond a simple prohibition of the illegal acts, but it declines to impose a breakup," said William Kovacic, a professor at George Washington University Law School.
Google Stock: Forward-Looking Ruling
He added: "This moderate approach stands the best prospect of success in the appeals that lie ahead. In particular, I think the case is destined to come before the Supreme Court, which has tended to be skeptical of strong intervention in the affairs of dominant firms."
Kovacic served as Federal Trade Commission chairman in the George W. Bush administration.
"I think the remedy is an important step toward restoring competition for search," said Rebecca Allensworth, a professor at Vanderbilt Law School. "Notably, it includes things Google can and can't do related to its AI products (Gemini), meaning that the order could have a real effect on competition even as search changes technologically to include more AI."
She added: "The divestiture remedy requiring a sell-off of Chrome was never a realistic option, so it's no surprise the judge didn't order that. This goes further, arguably, than the (1999) remedy in Microsoft did, so it's a risk for the judge in terms of the appeal. But it's a calculated risk, and ultimately I think it's most likely the appellate court will affirm."
On the stock market today, Google stock closed up 9.1% to 230.66, an all-time high. Shares hit 231.31 in intraday trading. Apple stock rose 3.8% to 238.47.
With Wednesday's gain, Google stock is up 21% in 2025. Apple stock is down about 2%.
'Status Quo' Result?
Under Mehta's ruling, Citi analyst Atif Malik in a report said Google will be allowed to continue to pay search fees to Apple as long as the deal is not exclusive. "That means Apple can promote other search engines, and can set a different search engine on different operating system versions or in a privacy mode. We believe this could change pricing and help Apple negotiate the deal annually," Malik said.
At JPMorgan, analyst Doug Anmuth said in a report: "We expect mostly status quo as Google search will likely remain the preloaded default search option across access points. Certain distributors (like Apple) could — in theory — add additional default search partners, but Google provides scale, high quality product, and the most compelling monetization."
At Bank of America, analyst Justin post said: "The judgment preserves Google's ability to maintain its search distribution position through payments to partners. Given superior Google search monetization, we believe most partners will remain aligned with Google, with little incentive to develop their own search capabilities."
There had been speculation that Apple could pursue an acquisition of Perplexity to catch up in artificial intelligence-based internet search. Meanwhile, Perplexity on Aug. 12 made an unsolicited $34.5 billion bid for Google's Chrome browser. The company said several investors agreed to back the offer.
Futures: Google, Apple Jump On Antitrust Ruling
Google Stock: Advertising Antitrust Case Next Up
Google also faces another antitrust case. In April, Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia ruled that Google has used classic monopoly-building tactics to dominate online advertising. The DOJ had claimed Google's dominance of the digital ad market has damaged advertisers and content creators.
Some analysts have called it the "DoubleClick trial." In 2008, Google acquired leading digital advertising firm DoubleClick for $3.1 billion.
Brinkema has slated hearings in September to discuss possible remedies.
The government has stated that Google should sell off its Google Ad Manager, which includes the company's publisher ad server and its ad exchange. The ad servers and the market for ad exchanges sit between buyers and sellers.
Alphabet Stock Technical Ratings
The antitrust case has loomed over Google stock. The impact of generative artificial intelligence on the internet search advertising business of Google remains another key issue for investors.
Meanwhile, Google stock holds an IBD Composite Rating of 98, according to IBD Stock Checkup.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Google stock has an Accumulation/Distribution Rating of B+. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
