Google's market capitalization increased by $230 billion after avoiding a breakup in antitrust case

Google's stock price rose 9.14% on Wednesday (September 3rd), adding $234 billion to its market capitalization, as investors viewed the antitrust case's outcome as generally favorable for the tech giant.

In an antitrust case set to begin in September 2023, the US Department of Justice had proposed breaking up Google, which would include spinning off its Chrome browser.

Last year, Google was found to have an illegal monopoly in its core internet search market, but US District Court Judge Amit Mehta rejected the Justice Department's most severe proposed consequences.

Google will not have to spin off Chrome. The company can still pay other companies to pre-install its products, but cannot enter into exclusive contracts with payment or licensing conditions.

This means Google will still be able to pay Apple billions of dollars to be the default search engine on iPhones.

"This is a huge win for Cupertino and a sweeping ruling for Google, removing significant pressure on Apple's stock price," Daniel Ives, Wedbush's head of global technology research, said in a note on Tuesday (September 2).

Google's core search business has been facing increasing competition from companies like Perplexity and OpenAI. But the company has so far withstood the challenge, and its advertising business is still growing.

Google's hopes of becoming a major AI player rest on its suite of AI models and its eponymous chatbot, Gemini.

"Following today's announcement, we are increasingly constructive on the long-term durability of Google's search business and have raised our expectations accordingly," Ives said, adding that he now has a new price target of $245 for Alphabet's stock.

The ruling also means that Apple will not have to divest itself of its Android operating system.

Given that approximately 70% of smartphones worldwide run Android, Android is seen as a key tool for Google to grow Gemini's user base, providing the company with an existing user base.