A federal judge's decision to reject a breakup of Alphabet Inc.'s (NASDAQ:GOOG) (NASDAQ:GOOGL) core businesses highlighted how OpenAI's ChatGPT and the rise of generative AI reshaped the competitive landscape, undermining the Justice Department's landmark antitrust case.
Judge Cites AI As Key Competition Factor
On Tuesday, U.S. District Judge Amit Mehta ruled that Google will not be forced to spin off key assets like YouTube, Chrome or its Android operating system, concluding that the DOJ overreached in its demands.
In his ruling, Mehta repeatedly pointed to AI-driven disruption in the search market, citing ChatGPT's explosive growth to 700 million weekly users and competition from startups like Anthropic and Perplexity.
“Much has changed since the end of the liability trial,” the statement read, adding, “No new competitor has entered the market. But artificial intelligence technologies, particularly generative AI (‘GenAI’), may yet prove to be game changers.”
See Also: OpenAI’s ChatGPT Makes Headway In Search, Threatening Google’s Reign
ChatGPT Launch Flipped Google's Narrative
Ironically, OpenAI's 2022 public launch of ChatGPT was initially seen as a threat to Google's dominance. Google reportedly issued a "Code Red" as it came under fire for trailing competitors like Microsoft Corporation (NASDAQ:MSFT), which quickly teamed up with OpenAI to embed ChatGPT-style features into its offerings.
Now, Google's success has been used in court to prove that competition in the search space is intensifying.
In response to Judge Mehta's decision, Google stated that the ruling rightly acknowledges the transformative impact of AI, which is providing people with far more options to access information.
“Today's decision recognizes how much the industry has changed through the advent of AI…This underlines what we've been saying since this case was filed in 2020,” the statement read.
Analysts Cheer, Warren Blasts Decision
The ruling sent Alphabet stock to record highs, with Class A shares jumping 5.81% in pre-market trading on Wednesday and Class C shares rising 5.39%, according to Benzinga Pro.
Wedbush analyst Dan Ives called the outcome a "huge win" for both Google and Apple Inc. (NASDAQ:AAPL), while Deepwater Asset Management's Gene Munster said it showed "the regulator's bark is bigger than the bite."
Sen. Elizabeth Warren (D-Mass.), however, called the ruling a "slap on the wrist" and urged the Donald Trump administration to appeal, citing concerns about "corruption in plain sight" amid reports of settlement talks between Google and Trump's legal team over a censorship lawsuit.
While the company avoided divestiture, it must share search data with competitors, a move Google plans to appeal, arguing it risks exposing proprietary technology.
Benzinga's Edge Stock Rankings show that GOOGL continues to demonstrate solid momentum over short, medium and long-term periods. Additional performance details are available here.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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