diff --git a/packages/shared/src/serverSettings.test.ts b/packages/shared/src/serverSettings.test.ts
index 1f847412b6c7..31f056c211e9 100644
--- a/packages/shared/src/serverSettings.test.ts
+++ b/packages/shared/src/serverSettings.test.ts
@@ -11,43 +11,34 @@ import { resolveServerBackgroundActivitySettings } from "./backgroundActivitySet
 import { createModelSelection } from "./model.ts";
 import {
   applyServerSettingsPatch,
-  extractPersistedServerObservabilitySettings,
   isModelSelectionProviderEnabled,
-  normalizePersistedServerSettingString,
   parsePersistedServerObservabilitySettings,
   resolveSourceControlWriterModelSelection,
 } from "./serverSettings.ts";
 
 describe("serverSettings helpers", () => {
-  it("normalizes optional persisted strings", () => {
-    expect(normalizePersistedServerSettingString(undefined)).toBeUndefined();
-    expect(normalizePersistedServerSettingString("   ")).toBeUndefined();
-    expect(normalizePersistedServerSettingString("  http://localhost:4318/v1/traces  ")).toBe(
-      "http://localhost:4318/v1/traces",
-    );
-  });
-
-  it("extracts persisted observability settings", () => {
+  it("ignores missing and blank persisted observability URLs", () => {
+    expect(parsePersistedServerObservabilitySettings("{}")).toEqual({
+      otlpTracesUrl: undefined,
+      otlpMetricsUrl: undefined,
+    });
     expect(
-      extractPersistedServerObservabilitySettings({
-        observability: {
-          otlpTracesUrl: "  http://localhost:4318/v1/traces  ",
-          otlpMetricsUrl: "  http://localhost:4318/v1/metrics  ",
-        },
-      }),
+      parsePersistedServerObservabilitySettings(
+        JSON.stringify({ observability: { otlpTracesUrl: "   ", otlpMetricsUrl: "" } }),
+      ),
     ).toEqual({
-      otlpTracesUrl: "http://localhost:4318/v1/traces",
-      otlpMetricsUrl: "http://localhost:4318/v1/metrics",
+      otlpTracesUrl: undefined,
+      otlpMetricsUrl: undefined,
     });
   });
 
-  it("parses lenient persisted settings JSON", () => {
+  it("parses lenient persisted settings JSON and trims observability URLs", () => {
     expect(
       parsePersistedServerObservabilitySettings(
         JSON.stringify({
           observability: {
-            otlpTracesUrl: "http://localhost:4318/v1/traces",
-            otlpMetricsUrl: "http://localhost:4318/v1/metrics",
+            otlpTracesUrl: "  http://localhost:4318/v1/traces  ",
+            otlpMetricsUrl: "  http://localhost:4318/v1/metrics  ",
           },
         }),
       ),
diff --git a/packages/shared/src/serverSettings.ts b/packages/shared/src/serverSettings.ts
index dfd5b742e4e4..dc50da2d7627 100644
--- a/packages/shared/src/serverSettings.ts
+++ b/packages/shared/src/serverSettings.ts
@@ -69,14 +69,14 @@ export interface PersistedServerObservabilitySettings {
   readonly otlpMetricsUrl: string | undefined;
 }
 
-export function normalizePersistedServerSettingString(
+function normalizePersistedServerSettingString(
   value: string | null | undefined,
 ): string | undefined {
   const trimmed = value?.trim();
   return trimmed && trimmed.length > 0 ? trimmed : undefined;
 }
 
-export function extractPersistedServerObservabilitySettings(input: {
+function extractPersistedServerObservabilitySettings(input: {
   readonly observability?: {
     readonly otlpTracesUrl?: string;
     readonly otlpMetricsUrl?: string;