Google parent Alphabet has a lot at stake in the Department of Justice's non-jury antitrust trial, which starts Tuesday. While there's risk for GOOGL stock in the outcome, Apple will be part of the courtroom drama as well.
The trial is expected to take 10 weeks. The case will be decided by U.S. District Judge Amit Mehta. He could order a Google breakup or changes to the way Google promotes its search engine.
That includes Google's contract with Apple, which makes Google the default search engine on its Safari web browser.
AAPL Stock: Big Bucks From Google Deal
In a report on Sept. 7, Morgan Stanley estimated that Google paid Apple $15 billion to $20 billion in traffic acquisition costs in 2022 under the search engine deal.
For investors, "the key question is whether a final ruling could result in changes to Google's search contracts with hardware OEMs (Apple, Samsung), wireless carriers and web browser companies," analyst Brian Nowak said.
The Department of Justice sued Google in 2020. The case has taken nearly three years to come to trial. Depending on the trial's outcome, Microsoft's Bing search engine could get a boost.
Google has weathered Microsoft's upgrade to Bing using ChatGPT generative artificial intelligence technology.
GOOGL stock has soared 54% in 2023. MSFT stock has gained 39%. AAPL is up 37%.
GOOGL Stock: Search Dominance
Google handles about 90% of search engine queries worldwide.
The DOJ alleges that Google maintains a monopoly "through exclusionary distribution agreements that steer billions of search queries to Google each day."
In the Morgan Stanley report, Nowak said: "In Sherman Act antitrust cases, the plaintiffs typically have leeway to ask the Court for a remedy that fits Section 2 of the Sherman Act ... with the goal of terminating wrongful conduct and preventing the re-occurrence of wrongful conduct."
He added, "If the Court rules that Google's payment for default search placement is anti-competitive/represents monopolistic behavior, it could issue remedies such as fines, the elimination of exclusivity payments (to Apple and others), or the complete elimination of traffic acquisition payments altogether."
Alphabet Stock: Technical Ratings
Google stock owns an Accumulation/Distribution Rating of B, according to IBD Stock Checkup. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
Further, GOOGL shares hold an IBD Composite Rating of 98 out of 99. The best growth stocks have a Composite Rating of 90 or better.
As of Sept. 11, GOOGL stock holds a 133.74 buy point. Shares are now extended above a 5% buy zone.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
