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Key Takeaways
- The Department of Justice is reportedly considering breaking up Google to remedy its monopoly on the search market.
- Wedbush analysts said a forced split would be an unlikely outcome, adding the case could take years to conclude.
- The Google case will have implications for big tech antitrust regulation, the analysts said.
The Department of Justice (DOJ) is reportedly considering breaking up Alphabet’s Google (GOOGL) following a federal court’s decision that the tech giant maintains an illegal monopoly over the search market, though analysts said it’s an unlikely outcome.
Some of the other options the DOJ is considering include making Google share more data with rivals, and other measures to avoid giving Google an unfair edge over competitors, Bloomberg reported, citing anonymous sources close to the matter.
Breaking Up Google Would Be a ‘Stretch,’ With Final Decision Potentially Years Away, Wedbush Says
Breaking up Google would be “a stretch,” Wedbush analysts said, adding the case could potentially be tied up in the court system for years before reaching a final outcome. Google has already said it plans to appeal the ruling.
The analysts said that if Google’s appeal is unsuccessful, the most likely outcomes could include fines, forced changes in Google’s distribution agreements with Apple (AAPL) and others to offer Google as the default search option. This could benefit competitors like Microsoft’s (MSFT) Bing or OpenAI’s recently announced SearchGPT, and affect companies involved in the distribution agreements like Apple.
Wedbush analysts said they “do not expect any disruption to Google’s near-term operations” from the case.
Google Case Will Have Implications for Big Tech and Antitrust Regulation
The outcome of Google’s case will set a precedent for big tech companies and antitrust regulation.
Wedbush analysts said they “view the regulatory landscape for tech as gaining some momentum over the next year,” though the impacts are “relatively insulated for now and the Street will continue to view this as a background risk for the tech sector as it all plays out in the court system.”
The DOJ is also investigating Apple for potential antitrust violations and is reportedly examining Nvidia (NVDA) as the Federal Trade Commission (FTC) investigates Microsoft.
Alphabet shares were down 3.7% at $158.13 in early trading Wednesday. The stock has gained over 13% since the start of the year.