Technology

The Justice Department has suggested a breakup of Alphabet’s Google as a potential way to address its de facto search monopoly. The company is fighting back against the prospect. If it happens, however, investors might not be all that upset. “The government seems to be pursuing a sweeping agenda that will impact numerous industries and products, with significant unintended consequences for consumers, businesses, and American competitiveness,” wrote Lee-Anne Mulholland, Alphabet’s vice president of regulatory affairs in a Tuesday blog post. To call it a big deal would be an understatement. A breakup of a monopoly hasn’t happened since AT&T was split into pieces in the 1980s. The Justice Department has until Nov. 20 to decide on what specific remedy it is seeking. U.S. District Judge Amit Mehta, who ruled in August that Google has a monopoly in search, is expected to rule next year on what action should be taken. […]

JP Morgan analyst Doug Anmuth expects negative headlines for Google’s parent-company Alphabet, Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) when the Department of Justice (DOJ) proposes a broad and punitive set of potential remedies against the company this week. The DOJ is expected to file a high-level framework for potential remedies on Tuesday in its search distribution trial against Google. Anmuth said he expects the DOJ to file a “wide-ranging and far-reaching set of potential remedies, most likely more than the DOJ thinks it could ultimately win.” The JP Morgan analyst sees five potential remedies which could include: No exclusive default search agreements for Google across all browsers, OEMs and carriers The separation of Android & Chrome from Google The separation of Google Search ads from Google Limitations on how Google can implement AI in search Data sharing, including providing API or patent access to search competitors Anmuth predicted Google could see up to a 10% hit on

By Emily Bary A Bernstein analyst says it’s still ‘difficult to defend’ pitching Alphabet shares with conviction given various regulatory and competitive risks Are Alphabet Inc. shares a bargain – or justifiably cheap? That’s a question Bernstein analyst Mark Shmulik recently explored, as he noted some striking data points. For one, Alphabet shares (GOOG) (GOOGL) are trading at nearly their largest-ever discount to the S&P 500 SPX when looking at forward price-to-earnings multiples, and the actual record discount was set just a few weeks ago. The stock is also trading at its largest discount to Meta Platforms Inc. shares (META) on record. If you looked at the Google parent company’s forecasts without knowing the company behind them, you would likely be tempted to buy, Shmulik said. Shares are trading at 19 times forward earnings estimates but the company is projected to grow revenue at a 11% annual clip through 2027.

Alphabet’s (GOOG) Google faces uncertainty around its search business, with investors now factoring in a possible loss of exclusivity with Apple (AAPL), Oppenheimer said in a note emailed Wednesday. “Google generates 31% of gross search revenue ($61B) via Apple devices and pays 36% to Apple for exclusivity, resulting in 19% of net ad exposure,” Oppenheimer said. However, Google would need to retain only 65% of Apple search activity if there were no traffic acquisition cost payment, or 75% if the TAC decreases to 15%, it added. This could cap price-to-equity ration at 20, the brokerage said in the note. However, a survey showed that 75% users would go for Google if they had to pick a default search, and if Apple removed Google from default search, 78% would download Chrome, Oppenheimer said. The US Department of Justice’s case against Google’s Adtech unit is also a headwind which could translate to