Details of the Verdict
U.S. District Judge Amit Mehta ruled that Google does not have to divest Chrome or the Android OS. While the final ruling prohibits exclusive contracts, conditional payments, or licensing, Google can still continue paying companies to have its products pre-installed. This ruling also largely concerns Apple. In practice, this means that Google is authorized to continue billion-dollar payments to keep Chrome as the default search engine on iPhones.
Record on the Stock Market
The reaction of Alphabet’s share price on the stock market did not take long. After Wednesday’s market close, the price settled at $231.10, representing an increase of more than 9 percent, which directly boosted market capitalization by a substantial $234 billion. As mentioned earlier, the legislative ruling also applies to Apple, which resonated with the company’s share price as well. Although Apple’s growth was somewhat milder, 3.81 percent, even this figure was enough to raise Apple’s market capitalization by $130 billion.*
Performance of Google’s Share Price Over the Past Five Years*
Performance of Apple’s Share Price Over the Past Five Years*
Why Is This So Important?
The origins of the court proceedings date back to 2023, when Google was found guilty of maintaining an illegal monopoly in internet search. Had the latest hearings accepted all of the DOJ’s proposals, Alphabet would have faced a historic transformation that, in my view, would have significantly complicated the situation for this giant. Investors view the ruling just as positively, because the company can continue with its current business model, in which the advertising segment contributes the majority share, the latest quarterly results showed that out of total revenue of $96.43 billion, the advertising segment accounted for as much as $71.34 billion.
Strategic Future
Continuing with the positive aspects, the ruling also opened the door to deeper cooperation between Android and Google’s plans in the field of artificial intelligence. The system, which powers roughly 70% of smartphones worldwide, is becoming a natural gateway for the expansion of Gemini – a family of AI models and chatbots on which Google is building its future.
Conclusion
The monopoly storm thus passed for Google without dramatic intervention, which means for investors that the company once again has freer hands for expansion and adaptation in the race for leadership in the era of artificial intelligence. Moreover, the share price immediately confirmed this assumption, rising to a new all-time high – something investors undoubtedly welcomed.
* Past performance is not a guarantee of future results
