- A Tuesday federal court ruling against Alphabet/Google doesn't include divestiture.
- The tech giant can keep Chrome and Android, but the decision bans exclusive contracts.
- Alphabet must also share some of its user data with competitors.
U.S. Department of Justice lawyers were seeking a landmark divesture of assets owned by tech mega giant Alphabet after a federal court ruled that operations behind its Google search engine violated longstanding antitrust regulations.
But on Tuesday, U.S. District Judge Amit Mehta ruled Alphabet does not have to sell off its widely used Chrome web browser or Android operating system in a remedy declaration that comes more than a year after the antitrust decision.
“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 decision states. “Plaintiffs overreached in seeking forced divesture of these key assets, which Google did not use to effect any illegal restraints.”
Tuesday’s ruling does, however, bar Alphabet from striking exclusive search engine contracts with device and browser developers though the company can still make payments to have its products preloaded. The ruling also instructs Google to share some of the massive trove of data it gathers on users with companies identified as “qualified competitors,” according to a New York Times report.
Alphabet and Apple, a longtime Google licensing partner, both saw stock price increases in after-hours trading following Tuesday’s ruling. At the close of regular trading, Alphabet had a market capitalization of nearly $2.5 trillion while Apple closed with a $3.38 trillion market cap.
Wedbush Securities analyst Dan Ives said the remedies portion of the court case turned out to be a win for both companies, according to CNN, particularly following a Bloomberg report that the two companies may partner to incorporate Gemini into Siri.
“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,” Ives said in a research note.
For years now, Google has been in the practice of striking exclusive, multibillion-dollar deals with device makers to defend its position as the default search provider on smartphones and web browsers, giving it what the court sees as an unfair advantage that relies on consumer habit rather than choice, per CNN. By 2020, 95% of all U.S. search queries on mobile devices went through Google, Mehta noted in his opinion.
The ruling comes some five years after the government initiated its antitrust claims and the remedy ruling is the first targeting a tech company’s market dominance since an antitrust ruling against Microsoft some 20 years ago that stemmed from how the software maker bundled its web browser in its Windows operating system software.
Alphabet has signaled it will appeal the ruling which could delay implementation of the federal court penalties for years.