A federal judge ruled that Google parent Alphabet (GOOGL) would not have to sell key businesses such as its internet browser Chrome or mobile operating system Android, helping the company skirt out of the worst outcome stemming from a years-long, high-profile monopoly case.
The decision comes 13 months after the same federal judge ruled that Google held an “illegal monopoly” in internet search. That ruling had towered over the company, stirring investor worries that the court might consider the Justice Department's recommendation to force the company to divest one or more of its core businesses.
However, on Tuesday, Judge Amit Mehta simply ruled that Google could no longer have “exclusive contracts” for Search, Chrome, or other products. He also ordered the company to share search data with competitors. He added that the DoJ, “overreached in seeking forced divesture of these key assets, which Google did not use to effect any illegal restraints.”
Despite the win, Alphabet says that it plans to appeal the antitrust ruling. That worked wonders for tech peer Microsoft (MSFT) in its 2001 antitrust appeal, helping it to skirt out of the worst consequences.
The news was welcomed by investors, which sent Alphabet stock soaring nearly 8% in after hours trading, with the worst outcome for the company now in the rear view. It clears a crucial hurdle for the tech company, which had lagged other megacap tech peers until recently.
It might also mark the starting gun for a fresh rally in the search giant. At a price-to-earnings ratio of 22.8x, it remains one of the cheaper megacap tech stocks on the market.
Up just 11.57% year-to-date, the company could have plenty of room to play catch up with software peers such as Meta Platforms (META) (+22.67% YTD) and Microsoft (+20.6%).
Over the last few trading sessions, it has finally eclipsed the year-to-date return on the Nasdaq-100, which is up 10.75% YTD.
