In a major victory for Alphabet Inc., U.S. District Judge Amit Mehta last Tuesday ruled Google will not be required to sell its Chrome browser, calling divestment a “poor” remedy in the landmark antitrust case won by the Department of Justice and state attorney’s general last year. But the tech giant must abandon its exclusive search distribution contracts worth billions of dollars that have cemented its market dominance.

The decision sent Alphabet shares surging more than 8% in extended trading as investors celebrated the company avoiding the most severe penalty of a partial company breakup. Google was not immediately available for comment, but is expected to appeal.

Mehta ordered Google and DoJ to “meet and confer” and submit a revised final judgment by Sept. 10 that adheres to his opinion.

Judge Mehta, who determined in August 2024 that Google illegally monopolized the search market, delivered his long-anticipated remedies ruling following a trial in May focused on determining appropriate penalties. Mehta ordered Google to give competitors access to data stockpiled from trillions of queries that help to improve the quality of its search results.

While Google can continue to make payments to “distribution partners for preloading or placement of Google Search, Chrome, or GenAI products,” the ruling prohibits exclusive contracts that guarantee default search placement, including Google’s lucrative arrangement with Apple Inc. for iPhone search defaults.

What this essentially means is that Google may continue to make its $20 billion-year payments to Apple in exchange for the iPhone maker using Google Search as the default search engine in its Safari browser and Siri. That news sent Apple shares up more than 3% in after-hours trading Tuesday.

“This is a monster win for Cupertino and for Google its a home run ruling that removes a huge overhang on the stock,” Wedbush Securities analyst Dan Ives said in a note following the judge’s decision. “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. We now see a green light for a bigger Gemini AI partnership between Apple and Google with this DOJ case now in the rear view mirror.”

The Justice Department and state AGs had pushed for divestiture of the company’s search business that is used by about 3.5 billion people, prompting unsolicited offers in recent weeks from the likes of Perplexity AI and Search.com, as well as keen interest from rival OpenAI.

But Mehta decided in a 226-page decision, “After two complete trials, this court cannot find that Google’s market dominance is sufficiently attributable to its illegal conduct to justify divestiture.” He added that such “radical structural relief” would require a more heightened causal connection.

Mehta also refused to grant the Justice Department’s request for a contingent divestment of Google’s Android operating system. He wrote the government “did not present any evidence to justify a contingent structural remedy.”

Former FTC Chief Technologist Neil Chilson called the decision “another indication that courts are going to properly remain focused on consumer welfare in their antitrust decisions.”

Privacy experts, however, quickly expressed disappointment in the decision, and urged the Justice Department and states to appeal.

“You don’t find someone guilty of robbing a bank and then sentence him to writing a thank you note for the loot,” Nidhi Hegde, executive director of the American Economic Liberties Project, said in an email. “Similarly, you don’t find Google liable for monopolization and then write a remedy that lets it protect its monopoly. This feckless remedy to the most storied case of monopolization of the past quarter century is a complete failure of his duty and must be appealed.”

Danielle Coffey, CEO of the News/Media Alliance, said Mehta’s ruling “did not address the ability of Google to further cement its market power through its AI offerings. Google is forcing content creators to give away their content to be used in its AI offerings to remain in Google Search. This is a no-win scenario that will continue to harm publishers that invest in high-quality, journalistic and creative content. Giving publishers the ability to opt out of Google’s AI is critical to preserving an open internet free from anti-competitive behavior and preserving a fair playing field for companies across a variety of industries. This ruling is not the end, but it is a missed opportunity.”

A forced cleaving of Chrome from Google threatened to upend a browser market already going through major changes as AI-powered search tools from Perplexity, OpenAI’s ChatGPT, and others rapidly gain acceptance among consumers.

“Does reaching parity — or even surpassing Google — on specific platforms really matter? Some would argue that competitors are already at parity, or in some cases ahead,” Simon Poulton, executive vice president of innovation at Tinuiti, said in an email. “But Google’s dominance goes far beyond search. With assets like Maps, Gmail, Android, Home, and Workspace, they’ve built an ecosystem so expansive that they function as the ‘everything store’ for digital.”