Alphabet's antitrust battle with the Justice Department could result in its exclusive internet search with Apple being scuttled, warned an Evercore ISI analyst on Monday. He lowered his price target on Google stock on views that "a worst-case scenario is a more likely scenario than the market assumes."
On the stock market today, Google stock dipped a fraction to 157.38.
A federal judge on Aug. 5 ruled that Google has violated antitrust laws by engaging in unfair business tactics to dominate the internet search advertising market. Alphabet's $20 billion in annual payments to Apple, which make Google the default search engine on iPhones, were a central part of the government's case.
Google Stock: Ad Tech Trial
A second phase of the trial must now take place to determine what remedies the federal court will order. Google will likely appeal.
"A worst-case scenario would be where Google is no longer allowed to bid for exclusive search distribution deals in the U.S.," said Evercore ISI analysts Mark Mahaney in a report. "Another company (Microsoft) 'buys out' the exclusive search distribution deals, leading to a material share loss by Google on the search access points covered by those distribution deals (which amounts to approximately half of the U.S.)."
Mahaney lowered his price target on Google stock to 200 from 225.
Meanwhile, another government antitrust lawsuit versus Google started Sept. 9. Some analysts call it the "DoubleClick trial." In 2008, Google acquired a leading digital advertising firm DoubleClick for $3.1 billion.
Google Stock: Technical Ratings
The DOJ claims Google's dominance of the digital ad market has damaged advertisers and content creators. The outcome of the 2024 Presidential election may impact Big Tech's antitrust battles.
Also, Google stock has gained 12% in 2024.
Google stock hit a new all-time high of 191.75 on July 10. But Alphabet stock pulled back sharply along with most the Magnificent Seven amid a market rotation out of the technology sector and artificial intelligence plays.
Also, Alphabet stock has clawed back to near its 200-day moving average, a key technical level, according to IBD Stock Check-up.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
