A growing number of Wall Street analysts have issued warnings about a potential Google breakup as the Big Tech giant tries to wriggle out of a pair of major federal antitrust lawsuits that could devastate its business model.
The Justice Department is seeking a forced selloff of Google’s digital advertising business in an antitrust case that kicked off last week in Virginia federal court. Separately, a federal judge will consider a potential breakup after ruling last month that Google operates an illegal monopoly over the online search market.
While the final outcome in both cases is likely years away, research notes compiled by the Wall Street Journal suggest that some analysts are expecting a negative result for Google.
Bernstein analyst Mark Schmulik said it was “hard to envision Google escaping the battles unscathed.” Evercore ISI’s Mark Mahaney said his firm is “more cautious on Google’s shares” due to what he described as a period of “significant uncertainty” in the near term.
The digital advertising case – in which the DOJ alleges that Google siphons more than a third of every dollar spent on its ad platforms – will be a “difficult trial for Google to win,” according to a Sept. 9 note by KeyBanc Capital’s Justin Patterson cited by the Journal.
Google could lose 1% to 2% off its projected earnings in 2025 if it is forced to sell off its adtech businesses, according to Patterson’s estimates.
The Post has reached out to Google for comment.
Google shares have plunged approximately 14% since the company’s current financial quarter began on July 1. By comparison, shares of Microsoft and Amazon – two other Big Tech firms that face antitrust scrutiny – have each fallen about 4% over the same period.
In the adtech case, the DOJ is arguing that Google, at a minimum, should be required to sell off its Ad Manager marketplace.
The feds allege that Google operates a “trifecta of monopolies” in digital advertising by controlling Ad Manager, which links advertisers to online publishers, as well as products used on the buy and sell side of most ad deals.
The court heard damning testimony last week, including details about an internal document in which a Google executive bragged in 2009 that the company’s goal was to “crush” digital ad rivals.
In the online search case, Judge Amit Mehta said earlier this month that he plans to decide on Google’s punishment by August 2025.
The DOJ’s attorneys are expected to push Mehta to order Google to sell off assets that fueled the search monopoly, such as its Android operating system or Chrome web browser.
Other options include blocking Google from paying billions to partner firms, such as Apple and AT&T, to ensure its search engine is enabled by default on most smartphones.
Mehta determined that the payments were anti-competitive and stifled competition against Google’s search engine.