Alphabet stock (NYSE: GOOG) is trading sharply higher today and has hit a record high after a favorable ruling in the landmark antitrust case, where the US Department of Justice (DOJ) was pushing for a breakup of Google.

In his judgement, U.S. District Judge Amit Mehta ruled against the most severe actions sought by the DOJ, which, among others, called for the company to divest its Chrome browser.

Google Does Not Need to Divest Its Chrome Browser

“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,” said Mehta in his order. He added, “Plaintiffs overreached in seeking forced divestiture of these key assets, which Google did not use to effect any illegal restraints.”

While Google has avoided the most drastic consequences, the ruling is not a complete acquittal. The court has imposed significant restrictions aimed at curbing Google’s anti-competitive practices. The judge sided with prosecutors in barring Google from entering into exclusive contracts that would make its services, including search and the Gemini AI app, the default on devices. This is a crucial aspect of the ruling, as the DOJ had presented evidence showing that Google spent billions of dollars on these deals to secure its dominant position in the search market.

Google Did Not get a Full Reprieve

Additionally, the court has ordered Google to share certain search index and user interaction data with competitors. This measure is intended to “pry open the market” and help rivals build more competitive products, addressing a key advantage Google holds through its vast data collection.

The decision represents a middle ground between the government’s aggressive demands and Google’s argument that its dominance was simply the result of providing a superior product. It reflects the judge’s caution in imposing remedies that could potentially harm the broader tech ecosystem and stifle innovation. Judge Mehta noted that the rise of new AI-powered search engines and chatbots has already begun to change the industry since the case first went to trial, and his ruling was crafted to address these new dynamics.

Both DOJ and Google Claim Victory

Meanwhile, both DOJ and Google are claiming victory after the judgment. In its release, the DOJ said, “The court’s ruling today recognizes the need for remedies that will pry open the market for general search services, which has been frozen in place for over a decade.”

It added, “the ruling also recognizes the need to prevent Google from using the same anticompetitive tactics for its GenAI products as it used to monopolize the search market, and the remedies will reach GenAI technologies and companies.”

In its blog, Google said, “Today’s decision recognizes how much the industry has changed through the advent of AI, which is giving people so many more ways to find information. This underlines what we’ve been saying since this case was filed in 2020: Competition is intense, and people can easily choose the services they want. That’s why we disagree so strongly with the Court’s initial decision in August 2024 on liability.

Pointing to the condition on sharing search data with rivals and limits on distributing Google services, Google VP of regulatory affairs Lee-Anne Mulholland added, “We have concerns about how these requirements will impact our users and their privacy, and we’re reviewing the decision closely.”

Implications for Other Big Tech Lawsuits

The outcome of this case is seen as a precedent-setting moment that could influence how other antitrust lawsuits against major tech companies like Meta, Amazon, and Apple are handled. While some critics, such as the American Economic Liberties Project, have called the ruling a “complete failure” for not breaking up the monopoly, the court’s decision marks a new chapter in the ongoing debate over the power of Big Tech.

The DOJ and Google are expected to continue to litigate the specifics of the ruling, and an appeal is likely. However, for now, Google has won a major battle, preserving its core business structure and avoiding a breakup that would have fundamentally altered the company and the technology industry as a whole.

Analysts Welcome Court Ruling

Wall Street analysts have welcomed the court ruling and see it as a positive for Google, with Evercore terming it “best case scenario” for the company. According to analysts at Wedbush Securities, the ruling is a “home run” for Google and removes a “huge overhang on the stock.” This sentiment was echoed by other firms, with JPMorgan stating that the decision would have “no major impact to financials going forward, which is a win.” The relief for investors is palpable, as the potential disruption and financial harm from a breakup had been a source of considerable concern for years.

DA Davidson maintained its neutral rating and $190 target price on GOOG but said the ruling represents “parting of the clouds” for investors over a potential divestiture of Chrome.

“The decision allows Google to continue paying for Search distribution, but bars it from exclusive contracts — a positive for Apple and other distribution channels,” said BMO Capital while reiterating GOOG as a top-pick.