Alphabet shares surge after court spares it from a breakup
FILE PHOTO: The Google logo is seen outside the company's offices in London, Britain, June 24, 2025. REUTERS/Carlos Jasso/File Photo
Alphabet shares jumped more than 6 per cent in premarket trading on Wednesday after a U.S. judge ruled against breaking up the Google parent, clearing a major regulatory overhang and putting it on track to add more than $160 billion to its market value.
The ruling on Tuesday by Judge Amit Mehta allows Google to retain control of its Chrome browser and Android mobile operating system, while barring certain exclusive contracts with device makers and browser developers.
It, however, allowed Google to continue to make payments to partners such as Apple to feature its search engine. Shares of the iPhone maker were up 3.7 per cent before the bell.
"This outcome removes a significant legal overhang and signals that the court is willing to pursue pragmatic remedies rather than scorched-earth tactics," said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
Alphabet shares are up nearly 11.7 per cent this year, slightly outperforming the S&P 500 index, but trailing Big Tech peers Meta and Microsoft.
The ruling preserves Alphabet's ability to deepen its partnership with Apple and potentially integrate its Gemini AI into future iPhones, analysts said.
"For Apple, this news seems to save it $20 billion+ flowing through the Services segment. In short, it is just what the doctor ordered since Services is all that matters for the multiple," said Ben Reitzes, analyst at Melius Research.
Apple was in early talks to use Gemini AI to underpin a revamped Siri voice assistant on its devices, Bloomberg News reported last month.
The U.S. government sued Google in 2020, alleging it illegally maintained a monopoly in search through exclusionary deals with device makers and browser developers.
Alphabet's shares trade at 20.3 times earnings expectations, a discount to other so-called Magnificent Seven stocks and the broader S&P 500 index.
CHALLENGE TO SEARCH DOMINANCE
The Justice Department said the remedies will pry open the market for search services and protect GenAI competition.
Judge Mehta ruled last year that Google violated antitrust laws but declined to order a breakup on Tuesday, citing the rise of AI tools like ChatGPT as emerging competition.
Google must share certain search index and interaction data with competitors, the ruling said, a move that can help AI rivals build and improve competing chatbots and search tools.
Even so, Google's scale and data lead remain formidable, analysts said.
"The order requires data sharing that is limited in scope, in a way we conclude may only marginally boost competition by generative AI services," said Nick Rodelli, legal analyst at CFRA Research's Washington Analysis.
