Google survives breakup, gets to keep Chrome, thanks to rise of ChatGPT, Perplexity AI

Google avoided a breakup after a US judge ruled against the government’s most onerous proposals, including a forced sale of its Chrome browser, in another court victory for Big Tech in the biggest antitrust case in three decades. The shares jumped.

The emergence of Generative AI changed the course of the Google case, US judge Amit Mehta says.(Reuters)

AI models represent a long-term threat to the search industry as chatbots and other Generative AI technologies become more advanced and behave more like search engines, Judge Amit Mehta said on Tuesday. Still, the Alphabet Inc. company will have to make some concessions, including sharing online search data with rivals and ending exclusive contracts for distribution.

“The emergence of Gen AI changed the course of this case,” Mehta wrote in the judgement.

The ruling represents a setback for the US government in its bid to curb the power of the biggest US tech companies, falling far short of the most severe remedies sought by antitrust enforcers. The finding follows the Washington-based judge’s ruling last year that Google illegally monopolised the markets for online search and search advertising. Mehta held a three-week hearing in April to determine a fix.

In a statement, Google praised the decision for recognising how AI has changed the search industry, but said the company continues to disagree with Mehta’s earlier ruling that it monopolized online search. The search giant also said it was worried about the data-sharing requirements the judge imposed.

“We have concerns about how these requirements will impact our users and their privacy, and we’re reviewing the decision closely,” said Lee-Anne Mulholland, vice president of regulatory affairs. “The court did recognise that divesting Chrome and Android would have gone beyond the case’s focus on search distribution, and would have harmed consumers and our partners.”

While it’s barred from exclusivity deals, Google will still be allowed to pay its partners—a key win for Apple Inc., which has received roughly $20 billion a year for making Google search the default on iPhones.

“Cutting off payments from Google almost certainly will impose substantial— in some cases, crippling—downstream harms to distribution partners, related markets, and consumers, which counsels against a broad payment ban,” the judge wrote.

On Wednesday, Alphabet shares surged as much as 9.2% to $230.86 in New York, reaching its highest intraday level in nearly five months following the release of the judge’s ruling. Apple shares climbed more than 2.5%.

‘Slap On The Wrist’

The order is one of the most monumental court decisions affecting the tech sector in more than a quarter century, and could offer a blueprint for other judges who may end up weighing similar choices in cases against Meta Platforms Inc., Amazon.com Inc. and Apple.

“For observers who have followed this case closely, Judge Mehta’s slap-on-the-wrist ruling comes as a shock,” said analysts at Moffett Nathanson in a note on Wednesday. “This outcome is a home run for the status quo, and the status quo has been very favorable to both Google and Apple.”

The US has found it difficult to rein in Big Tech via the Justice Department and Federal Trade Commission, across both the Trump and Biden administrations, and indeed for years before that.

White House guidelines released as part of the AI Action Plan in July called on the US FTC to back off on cases that put AI innovation at risk.

That was potentially a boon for companies like Microsoft Corp. that have been subject to FTC probes for how they’re using their dominant positions to add AI services.

Early this year, in the first antitrust case under Trump, the DOJ sued to block Hewlett Packard Enterprise Co.’s $13 billion deal for Juniper Networks Inc. on competition grounds. The companies ultimately settled the case after agreeing to sell some assets.

Microsoft was also able to push through its $69 billion deal for gamemaker Activision Blizzard Inc. after the FTC lost a case to block it in 2023. The commission lost its latest appeal in May.

Sharing Search Data

Under the Google ruling, the company will be required to share some of its search data with competitors. Those competitors could include Microsoft and DuckDuckGo Inc., as well as many of the new AI companies like OpenAI and Perplexity. That data would aid in building out competing search engines or artificial intelligence models.

The judge also ruled that Google can no longer require device makers to take all of its apps in order to access the Google Play Store on Android—a second modest win for the Justice Department in addition to the data-sharing requirement.

“Google is being held accountable,” DOJ antitrust head Gail Slater said in a post on X. “The court didn’t order all of our requested relief, and we are weighing our options. The court did agree with the need for remedies that will restore competition and reopen the digital playing field, driving investment and innovation that will ensure America leads the next era of technology.”

But Google opponents criticised the decision as not going far enough.

“We do not believe the remedies ordered by the court will force the changes necessary to adequately address Google’s illegal behaviour,” said DuckDuckGo Chief Executive Officer Gabriel Weinberg, who testified at the trial. “Google will still be allowed to continue to use its monopoly to hold back competitors, including in AI search.”

Allowing the payments for browser placement to continue is a win for Apple, which favours the Google search engine by giving it the best placement in Safari search bar on computer and mobile devices. Users can opt to switch to Microsoft’s Bing, DuckDuckGo and other options.

Allowing Google to keep making payments to Apple will give the iPhone maker a much needed reprieve for its services segment, which is already under fire globally from regulators trying to break up its $100 billion per year App Store business. The judge’s ruling indicates that the default arrangement can continue — with minor adjustments.

Alternative Search Engines

Apple will need to better promote alternative search engines and make changes to its default search engine settings annually. The judge also ruled that users must be able to set a different default search engine for privacy mode, an ask that Apple already addressed several months ago.

While Google can still pay Apple, Mehta said that could change in the future.

“For now, Google will be permitted to pay distributors for default placement. There are strong reasons not to jolt the system and to allow market forces to do the work,” Mehta wrote. But the judge said he’s “prepared to revisit a payment ban (or a lesser remedy) if competition is not substantially restored through the remedies the court does impose.”

Perplexity AI declined to comment. Microsoft, OpenAI and Anthropic didn’t immediately respond to requests for comment.

The case against Google was initially filed in the final months of the first Trump administration. After a 10-week trial in 2023 shepherded by then-President Joe Biden’s Justice Department, Mehta sided with the government in August 2024. In his decision, Mehta said that Google illegally dominated the search market by paying over $26 billion to Apple and other companies to make its search engine the default option on smartphones and web browsers.

To address the judge’s findings, the Justice Department proposed that Google be forced to sell its popular Chrome web browser and share some of the data it collects to create its search results. It also asked Mehta to ban Google from paying for search engine defaults—a bar that would also apply to Google’s AI products, including Gemini, which the government says were aided by the company’s illegal monopoly in search.

At the hearing this spring, Google argued that the government’s proposals were too extreme. The company said that the remedies would hurt America’s consumers, economy and position as a world leader in technology.

Justice Department ‘Overreached’

Mehta said in his ruling that the government “overreached in seeking forced divestiture of these key assets, which Google did not use to effect any illegal restraints.”

The judge directed the two sides to come back by 10 September 2025 with a new remedy proposal consistent with his ruling or file a status report outlining any disagreements.

Google is facing another possible breakup in a second Justice Department case challenging its monopoly over technology used to buy, sell and display advertising around the web. US District Judge Leonie Brinkema in Virginia ruled in favor of the government earlier this year and will hold a hearing in September to determine whether to force the company to sell tools used by websites selling ad space.

The case is US v. Google, 20-cv-3010, US District Court, District of Columbia (Washington)