"That changed on Sept. 2, when a federal judge finally delivered the legal penalties, and they largely favored Alphabet. The news sent the company's stock to a record high. Even so, Alphabet didn't escape unscathed. While the penalties pose no immediate threat, over the long run, the possibility exists for damage to its critical artificial intelligence (AI) business. Digging into the court ruling's implications can reveal if the tech titan's AI aspirations face long-term risk."
"The Sept. 2 legal ruling bars Alphabet from signing exclusive contracts with partners such as Apple. Deals are still allowed, as long as exclusivity isn't a component, so no immediate revenue impact is involved here. But another legal stipulation mandates sharing some of Google's search data with competitors. This is where AI comes in. Artificial intelligence relies on massive troves of data to perform tasks accurately. The court's decision arms Alphabet's rivals with ammunition to improve their AI models."
"That competition includes Microsoft, which battles Alphabet on several fronts, including search, digital advertising, cloud computing, and of course, AI. The court's requirement would deliver Google's data insights to Microsoft's Bing search engine, and feed across all the areas where the two corporations compete. But where it can really provide value is in AI. Microsoft incorporates AI models developed by ChatGPT creator OpenAI into its offerings, since it has a stake in the company."
Alphabet was declared an illegal monopoly last August, triggering investor concern, but a Sept. 2 ruling largely favored the company and lifted its stock. The ruling bars exclusive contracts with partners like Apple, permitting nonexclusive deals with no immediate revenue loss. A separate stipulation requires sharing portions of Google's search data with competitors, providing rivals with valuable training data to improve AI models. Microsoft and others could use the data across search, digital advertising, cloud services, and AI offerings. The mandated data sharing creates a potential long-term threat to Alphabet's strategic advantage in artificial intelligence despite no immediate financial harm.
Read at The Motley Fool
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