"Black Swan" didn't arrive: Google avoided worst-case scenario in monopoly case

Google has managed to avoid the toughest scenario in its monopoly case against the US government. The company will not have to sell its popular Chrome browser, which plays an important role in its advertising business. Quotes of Google's parent company soared. Barclays earlier warned that the forced sale of the browser would be a "black swan" for the search giant's investors and would trigger a stock crash.

Google does not have to sell the Chrome browser it owns, a federal court ruled Sept. 2 in a U.S. antitrust case against the search giant. The same applies to the Android operating system. "Plaintiffs have overreached by seeking to compel the sale of these key assets that Google has not used to restrain [competition]," the ruling said, as quoted by CNBC.

Instead, the court enjoined Google from entering into exclusive contracts with other companies to have its search installed by default in the browsers on their devices. Google has such a deal with Apple, among others. At the same time, the court ruled that Google is not prohibited from making payments or offering other remuneration to partners for distributing its products, from search to Google Assistant and Gemini.

The decision is based on a case that Google lost in 2024. Then the court at the suit of the US Department of Justice recognized that the company illegally monopolized the search and search advertising market, including through exclusive deals with smartphone manufacturers. The U.S. government demanded that Google be required to sell the Chrome browser, with which the company collects data for ad targeting. Chrome accounts for more than 60% of the global browser market, and AI startups including Perplexity and OpenAI have expressed interest in buying it.

Google has promised to challenge the court's decision to recognize the company as a monopoly. This means that it may take years before the company will be obliged to fulfill it, writes Reuters.

The Google case has become one of the most significant lawsuits in the technology sector over the past quarter century, Bloomberg writes. The court, although siding with the government, refused to satisfy its most ambitious demand - to oblige the company to sell Chrome. The decision may serve as a benchmark for other judges who will consider similar cases against Meta, Amazon and Apple, the agency notes.

Shares of Alphabet, Google's parent company, soared 8% in extended trading in New York. Apple shares jumped 3.5% on news that Google was not banned from paying partners for distribution.

Earlier this summer, Barclays analyst Ross Sandler warned that Alphabet shares could collapse 15-25% if a court ordered the company to sell Chrome. "That would be a significant event, a black swan for Alphabet shares," he said.

Nevertheless, Barclays gave Alphabet shares an Overweight rating (equivalent to a "buy" recommendation) and raised its target price from $220 to $235 in July. That same month, JPMorgan analyst Doug Enmuth also recommended buying Alphabet shares with a target price of $232. He explained that the court ruling, whatever it may be, will remove the uncertainty that has been weighing on the quotes. Targets Barclays and JPMorgan - 10-11% above current quotes.

Overall, more than 80% of analysts covering Alphabet recommend buying the stock and none recommend selling it.

This article was AI-translated and verified by a human editor