The nuclear option for addressing the tech giant’s search dominance — a break-up — is off the table. That’s lifting Big Tech stocks. By Christine JiThe remedies targeting Google’s search dominance will give a major advantage to the AI chatbots disrupting the industry. Will Google Search be able to survive in the long term?While Google will not be forced to divest Chrome, it will need to allow qualified competitors to syndicate its search and text ad services.The long-awaited search remedies for Alphabet Inc.’s antitrust case were better than expected, but there are bigger challenges to Google’s (GOOGL) (GOOG) business ahead.Investors celebrated on Tuesday after Judge Amit Mehta ruled that Google would not have to divest Chrome, which was a structural remedy that the Justice Department had recommended during the hearing. Alphabet’s stock is up 8.3% in morning trading and on track to close at a record of $228.90.But Melius Research analyst Ben Reitzes questioned if the results of the ruling were “too good to be true.”Part of the reason behind the more lenient ruling is the rapid rise in artificial intelligence, which has made the search landscape more fragmented in recent years. Mehta acknowledged in the ruling that although Google remains the dominant player, generative AI is emerging as a competitor in the search space. Apple Inc.’s (AAPL) testimony in the case revealed that Safari searches dropped in April for the first time in 22 years, most likely due to the rise of AI.Users of AI chatbots bypass clicking on the ads found in Google Search, which Reitzes said poses a risk to Google. Although Google reported a 4% increase in paid clicks in its second-quarter earnings in July, the cost per click rose 8%, which Reitzes doesn’t think is sustainable.Mehta’s ruling favors helping AI products enhance their offerings, with the judge writing in the ruling memorandum that many of the remedies were crafted for the purpose of “ensuring that Google’s dominance in search does not carry over into the GenAI space.”Also read: Google is doubling down on AI in Search as it faces heightened threatsAdditionally, Google must now provide organic search results and user-interaction data to competitors to help them develop their own offerings, which Bernstein’s Mark Shmulik characterized as “more severe than expected” on Wednesday. Both Shmulik and Reitzes said this development will further boost ChatGPT, other chatbots and Apple Inc.’s businesses.As a result, “Google’s near-term risk is probably worse today than yesterday,” Shmulik wrote. “The ruling gives Apple a buffet of strategic options to consider which we believe could increase their negotiating leverage with Google on deal terms.”Apple’s stock was up 3% in Wednesday morning action, which could also reflect optimism over the judge’s decision to let Google continue its revenue-sharing agreement with the company, in which it pays Apple to preload Chrome and Google Search on its devices – though there will be some limitations.While some on Wall Street are concerned about AI overtaking Google Search, others see it as a surmountable challenge on Google’s end.While Needham analyst Laura Martin acknowledged that AI is chipping away at Google’s search monopoly, she said Google’s Gemini still maintains a strong competitive position among AI chatbots, and Google and Apple’s existing partnerships lend themselves well to a collaboration between Apple and Gemini.“We expect yesterday’s court decision to clear the way for new forms of partnership between [Apple] and [Google], which should add to earningsupside” for Google, Martin wrote.In a note Wednesday, TD Cowen analyst John Blackledge argued that Google is taking steps to successfully maintain its search leadership through the introduction of AI Overviews and AI Mode. A TD Cowen survey found that users of AI Mode ranked it similarly to ChatGPT, and the new AI features are leading to an overall increase in Google Search.Google “has similar or better GenAI technology vs competing upstarts,” Blackledge wrote.-Christine JiThis content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.(END) Dow Jones Newswires09-03-25 1110ETCopyright (c) 2025 Dow Jones & Company, Inc.
The nuclear option for addressing the tech giant’s search dominance — a break-up — is off the table. That’s lifting Big Tech stocks.
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