Alphabet’s stock price experienced a significant boost, rising 6% in premarket trading on Wednesday, following a favorable ruling in the Department of Justice’s (DOJ) antitrust case against Google.
The DOJ had initially proposed a drastic restructuring of Google, including the divestment of its Chrome browser, a measure aimed at breaking up the tech giant’s perceived monopoly. However, U.S. District Judge Amit Mehta rejected the most severe aspects of the DOJ’s proposal.
While Google was previously found to hold an illegal monopoly in internet search, Judge Mehta’s decision significantly lessens the consequences. Crucially, Google is permitted to retain its Chrome browser and continue its practice of paying companies to pre-load its products. However, a key condition of this is that Google cannot enter into exclusive contracts that make payments or licensing contingent on preferential treatment.
This means Google can still pay Apple billions to remain the default search engine on iPhones. This deal has significantly benefited both companies. Apple shares also rose in premarket trading.
Wedbush Securities’ global head of technology research, Daniel Ives, described the ruling as a “monster win” for both Apple and Google, highlighting the removal of significant uncertainty surrounding Alphabet’s stock.
This positive outlook is particularly significant given Google’s increasing competition from rivals like Perplexity and OpenAI in the search engine market. Despite this competitive landscape, Google’s advertising business continues to grow, demonstrating its continued strength and resilience.
The ruling further solidifies Google’s position in the mobile market. The company will not be forced to divest its Android operating system, a key asset in its broader AI strategy. With Android powering approximately 70% of smartphones globally, Google possesses a vast user base primed for its Gemini AI suite, a key component of its AI ambitions.
Ives further expressed increased optimism about Google’s search business’s long-term prospects, raising his price target for Alphabet stock to $245.
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