Alphabet’s Google Faces a Pair of Anti-trust Probes in Germany

Germany recently bolstered its antitrust rules aimed at big tech companies, and now it has Google in its crosshairs. Google is the largest unit of the Alphabet (GOOGL) conglomerate that includes self-driving company Waymo and delivery drone maker Wing.

Germany’s antitrust regulator Bundeskartellamt has opened two investigations into Google. In the first case, the authority will examine the company’s market power. Under the enhanced big tech regulations, the authority can prohibit companies from engaging in anti-competitive practices. Google’s broad array of digital services makes the authority suspect it wields too much market power.

“An ecosystem which extends across various markets may be an indication that a company holds such a market position. It is often very difficult for other companies to challenge this position of power,” said Bundeskartellamt head Andreas Mundt.

In the second case, Bundeskartellamt is investigating Google’s data processing terms. The authority will seek to determine whether people using Google services have sufficient choice about how the company uses their data. That will include examining how Google’s advertising services collect people’s data from third-party platforms. Google’s advertising sales constitute the bulk of Alphabet’s revenue. (See Alphabet stock analysis on TipRanks)

Google joins Facebook (FB) and Amazon (AMZN) on the list of big tech companies facing probes under Germany’s new tougher antitrust rules.

Citigroup analyst Jason Bazinet downgraded Alphabet’s stock rating to a Hold with a price target of $2,415, which indicates 2.21% upside potential. The analyst is cautious about the prospects of Alphabet’s advertising business.

“Many investors believe ad intensity per dollar of economic activity is rising. We see little evidence of this,” noted Bazinet.

Consensus among analysts on Wall Street is a Strong Buy based on 26 Buy and 2 Hold ratings. The average analyst price target of $2,778.32 implies 17.58% upside potential to the current price.

GOOGL scores a 9 out of 10 on TipRanks’ Smart Score rating system, implying the stock is likely to outperform the market.