TMTPOST -- Shares of Google parent   Alphabet Inc.   surged 9.1%   and   closed   at their new   record    on Wednesday   after after a federal judge   issued a ruling deemed   by   investors as light   penalties against the online   search   titan.

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U.S. District Judge Amit Mehta in his rulings   on   Tuesday said Google would   not   have to   sell its Chrome web   browser, rejecting the government ’ s most-stringent demand   including   a   forced   spinoff   of Chrome   and the Android operating system. The judge   said he wouldn ’ t force sweeping changes at Google because the market had changed significantly since the Justice Department sued in 2020.

Mehta   credited emerging competitors backed by artificial intelligence ( AI )   technology such as   OpenAI   and Perplexity, which posed   growing   threat to Google ’ s search business   and "changed   the course of this case."  

"No witness at the liability trial testified that GenAI   [ generative AI ]   products posed a near-term threat to GSEs   [ government-sponsored enterprises ] . The very first witness at the remedies hearing, by contrast, placed GenAI front and center as a nascent competitive threat," Mehta wrote   in   the   ruling.

According   to the ruling, Google has to share some of its search data and barred the company from striking deals that exclude Google ’ s search-engine rivals on devices and browsers.   It   must make search index data and user interaction data available to qualified competitors, which rival companies can utilize to further enhance their services. And this should be offered by the company for up to the next five years.  

Mehta didn ’ t bar Google   from   paying Apple Inc. to   make   Google   the default   search provider on its devices. But Google will   be prohibited by the judge   from entering exclusive contracts that relate to distribution of Google Search, Chrome, Google Assistant, and the Gemini app, a generative AI   assistant.

The ruling on   Tuesday was an outcome   of a landmark case from the U.S. government, filed in 2020. The Department of Justice and a bipartisan group of attorneys general from 38 states and territories   alleged that Google has kept its share of the general search market by creating strong barriers to entry and a feedback loop that sustained its dominance.  

Judged   Mehta   in August 2024   ruled   that Google has illegally held a monopoly in search and text advertising, marking   the first anti-monopoly decision against a tech company in decades.In the ruling, Google ’ s exclusive search arrangements on Android and Apple ’ s    iPhone and iPad devices   helped to cement Google ’ s anticompetitive behavior and dominance over the search markets.

The Department of Justice said on Teusday that the latest ruling recognizes the need for remedies that will pry open the market for general search services. "The ruling also recognizes the need to prevent Google from using the same anticompetitive tactics for its GenAI products as it used to monopolize the search market, and the remedies will reach GenAI technologies and companies," the department noted.

Wall Street analysts saw   Tuesday ’ s ruling as broadly   favorable for Alphabet. Following announcement   of the ruling, "we are increasingly constructive in the longer-term durability of Google ’ s Search business and are raising our estimates accordingly," Daniel Ives, global head of technology research at Wedbush Securities, said in a note   on Tuesday.

Ives now   has a new price target of $245 for Alphabet ’ s stock,   suggesting a nearly   15.6%   rally from Tuesday ’ s   close.   He   described   the ruling   as "a   monster win"   for Google and Apple   that "removes a   huge overhang   on the   stock."