In a ruling that sent both Google and Apple stock climbing after hours Tuesday, federal judge Amit Mehta delivered a mixed verdict that left the tech giant's most valuable assets intact while still imposing significant restrictions on its business practices. The decision caps off a five-year legal battle that industry observers had predicted could fundamentally reshape how Americans search the internet.
Judge Mehta rejected the Justice Department's most aggressive proposals, including forcing Google to sell off Chrome and potentially spinning off Android. "Google will not be required to divest Chrome; nor will the court include a contingent divestiture of the Android operating system in the final judgment," the ruling stated. "Plaintiffs overreached in seeking forced divesture of these key assets, which Google did not use to effect any illegal restraints."
But Google didn't walk away unscathed. The company must now share search data with rivals and is barred from the exclusive contracts that have underpinned its dominance for over two decades. Those billion-dollar deals with Apple, Samsung, and other device makers had ensured Google's search engine remained the default choice on smartphones and browsers worldwide.
The ruling strikes at the heart of what prosecutors called Google's "interlocking and pernicious harms" to competition. Since 2003, before either the iPhone or Chrome existed, Google has paid companies like Apple billions annually to secure prime real estate in the digital ecosystem. According to CNBC, these payments totaled more than $26 billion, with Apple alone receiving about $20 billion to make Google the default search engine on iPhones.
Wall Street Breathes a Sigh of Relief
Alphabet shares jumped 6% in extended trading following the announcement, while Apple saw a 4% boost. Analysts had warned that Google stock could swing plus or minus 10% depending on the severity of remedies imposed. The market's bullish response suggests investors view this as a best-case scenario for both companies.
"Google shares could be positioned for an up to plus-minus 10% move depending on the announced remedies," BMO Capital Markets analyst Brian Pitz had predicted before the ruling. The actual market reaction suggests the punishment fell toward the lighter end of expectations.
For Apple, the relief is particularly acute. Wall Street analysts had estimated that losing Google's payments could reduce Apple's pre-tax profits by as much as 7%. While the ruling eliminates exclusivity arrangements, it doesn't ban payments entirely, meaning Apple could still negotiate lucrative deals albeit without the monopolistic protections Google previously enjoyed.
Even so, the changes create uncertainty about future revenue streams that have become increasingly important to Apple's services business. Google's payments to Apple have grown so substantial that they represent one of the most profitable aspects of the iPhone maker's ecosystem.
The ruling also addressed concerns about data sharing that Google CEO Sundar Pichai had raised during testimony, warning that forcing the company to share proprietary search data could enable competitors to reverse-engineer its technology. The final decision requires data sharing but includes provisions designed to protect Google's core innovations while still enabling meaningful competition.
The AI Wild Card Changes Everything
Perhaps the most intriguing aspect of this case isn't what it means for traditional search, but how it reshapes the emerging artificial intelligence landscape. Legal experts argue that limiting Google's ability to secure exclusive AI partnerships could prove more consequential than any browser divestiture.
Consider what's already happening: Apple chose ChatGPT over Google's Gemini for iPhone AI integration, a decision that antitrust reporter Leah Nylen noted reflects "a different mind-set in a world without payments from Google." Without those $20 billion annual payments providing leverage, Google can no longer guarantee its AI products will dominate mobile devices the way its search engine has.
The timing is crucial. AI-powered search represents the next frontier in information retrieval, with companies like Perplexity handling 25 million queries daily compared to Google's 16 billion. While that gap remains enormous, the new landscape prevents Google from simply buying its way to AI dominance through exclusive partnerships.
Even Microsoft, despite pouring $100 billion into Bing over the years, hasn't been able to meaningfully challenge Google's search monopoly. But AI search presents different dynamics, with new entrants potentially able to leapfrog traditional search entirely. Perplexity's $34.5 billion bid for Chrome, should Google have been forced to sell, demonstrates how seriously these emerging players view the opportunity.
The Justice Department had initially sought even more dramatic remedies, including forcing Google to divest its AI investments, particularly the more than $3 billion stake in Anthropic. While that proposal didn't make it into the final ruling, the restrictions on exclusive deals could prove equally impactful for Google's AI ambitions.
Google has already indicated it plans to appeal, which means any actual implementation of these remedies could be years away. The company successfully argued that many of the proposed changes would impose "substantial (in some cases, crippling) downstream harms to distribution partners, related markets, and consumers."
This case represents just one front in a broader antitrust campaign targeting Big Tech. Google faces additional litigation over its advertising technology, where another judge has already ruled the company holds illegal monopolies. The company is also fighting a separate ruling requiring changes to its app store following Epic Games' victory in the Fortnite lawsuit.
For now, Google keeps its crown jewels while grudgingly opening the door to more competition. Whether that's enough to genuinely change how Americans search the web may depend less on this ruling and more on whether AI-powered alternatives can convince users there's a better way to find information online. The real test won't be in courtrooms, but in the daily choices millions of users make when they need answers.
