Foreword

Alyson Shontell

Editor-in-Chief

Alphabet can breathe a big sigh of relief.

In the long-awaited “remedies” ruling in a closely watched antitrust case that began in 2020, U.S. District Court Judge Amit Mehta ruled that the Google parent would not have to spin off key assets like Chrome as punishment for monopolistic search practices.

Yes, Alphabet will have to abide by some potential new uncomfortable rulings. For example, it can no longer pay oodles of cash to be Apple’s iPhone exclusive search browser. But the spin-off of Chrome, the world’s most widely used browser, was the most problematic prospect for the company, and now that’s off the table.

Mehta’s reasoning is instructive: Generative AI, he noted, has changed the search landscape, and while Google is still the strongest contender in that space, it now has more fast-growing rivals. From the decision:

"Today, tens of millions of people use gen AI chatbots, like ChatGPT, Perplexity, and Claude, to gather information that they previously sought through internet search. These gen AI chatbots are not yet close to replacing GSEs [general search engines], but the industry expects that developers will continue to add features to gen AI products to perform more like GSEs. The emergence of gen AI changed the course of this case."

For years, the innovator’s dilemma at Google has been analyzed by media and investors, including here at Fortune. Its ad business is currently so reliant on its GSE that the company has seemingly been in no hurry to disrupt the search model with less ad-intuitive chatbots.

That doesn’t mean Google hasn’t been technologically capable, however—and could potentially even be waiting for the right moment to strike. After all, it acquired DeepMind, the initial AI industry leader, all the way back in 2014, a move that prompted Elon Musk and Sam Altman to join forces and launch a rival, OpenAI.

And because Google has been so dominant in search for so long—it still has almost 90% of global search market share—it is effectively sitting on far more data than any AI competitor. That gives it a huge advantage in building LLMs and AI assistants, like its own Gemini (which is easily accessible to anybody who uses Google Search the old-fashioned way).

If I were Alphabet CEO Sundar Pichai, I would have been tempted not to show what I could really do until this antitrust verdict came down. Maybe we’ll see Google really step on the gen AI gas now, and learn what’s been up its sleeve.

For more on what the antitrust ruling means for Google and its AI search competition, check out Fortune AI Editor Jeremy Kahn’s expert take here.

Deals & Developments

Analysts are suggesting that Apple (No. 4) purchase AI search engine Perplexity for as much as $30 billion to bolster its own lagging AI initiatives. Despite that, Bloomberg reports that Apple plans to double down on in-house initiatives by rolling out World Knowledge Answers—an AI-powered search feature similar to ChatGPT—to its Siri smart assistant early next year. The move would be in line with Apple’s “asset-light strategy,” through which it prioritizes targeted investments over the billions in data center spending that tech rivals have announced.
Kraft Heinz (No. 166) has announced plans to split into two separate publicly traded companies after losing approximately $57 billion in market value—about 60% of its total—since it was formed after the merger of H.J. Heinz Co. and Kraft Foods Group in 2015. Following the split, Global Taste Elevation Co. will take ownership of Heinz sauces and spreads, among other products, while North American Grocery Co. will house the company’s Oscar Mayer, Kraft Singles, Maxwell House, and Lunchables brands. Outgoing Berkshire Hathaway CEO Warren Buffett, who led the merger, admitted disappointment and told CNBC that “it certainly didn’t turn out to be a brilliant idea to put them together, but I don’t think taking them apart will fix it.”
DuPont (No. 339) agreed to sell its Kevlar and Nomex business to Arclin, a specialized materials and chemical products company backed by TJC, for approximately $1.8 billion. DuPont CEO Lori Koch praised the deal as part of the “continued optimization of the DuPont portfolio.”

Overheard

“It’s no longer viewed as a ceiling.”

—Kirby Perkins, managing director at executive search firm Crist Kolder Associates, whose research has identified that more CFOs are moving into CEO roles at Fortune 500 and S&P 500 companies.

On earnings calls:

Broadcom (No. 88) reported third-quarter revenue of nearly $16 billion, a 22% increase from a year ago, driven in part by a 63% surge in AI-related revenue. On the earnings call, CEO Hock Tan revealed that the company has secured a fourth customer placing a $10 billion order for custom AI chips. The Financial Times and other outlets reported that the buyer is OpenAI.
Salesforce (No. 120) beat expectations with $10.24 billion in quarterly revenue, up 10% from the same period a year ago. CEO Marc Benioff praised Agentforce, the company’s fast-growing agentic AI department, as well as new deals including those with Lululemon and the U.S. Army.
Dollar Tree (No. 139) reported quarterly revenue of $4.57 billion, up 12.3% year-over-year, attributed in part to increases in same-store net sales and traffic. CEO Michael Creedon noted during the call that “customers are seeking value and convenience more than ever, and Dollar Tree is uniquely positioned to deliver both.”
Hewlett Packard Enterprise (No. 143) posted third-quarter revenue of $9.1 billion, a 19% increase year-over-year. CEO Antonio Neri highlighted strong demand in the company’s server and networking segments during the company’s earnings call as well as the completed acquisition of Juniper Networks, an AI networking company. However, the Juniper deal faces ongoing scrutiny, with a coalition of 20 state attorneys general on Friday calling for a hearing to review the U.S. Department of Justice’s settlement that allowed the deal to go through earlier this summer.
Lululemon athletica (No. 401)