Google Challenges Germany’s Hate-Speech Law

Alphabet’s (GOOGL) Google is uncomfortable with certain requirements under Germany’s expanded hate-speech law. As a result, the company has gone to court to challenge parts of the law. Alphabet stock rose more than 3% in extended trading on Tuesday after dropping 1.59% in the regular session. (See Alphabet stock charts on TipRanks).

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Google’s biggest concern is the obligation to automatically pass on data to Germany’s criminal police office merely on the assumption that a person has breached the hate-speech law. It argues that doing so would violate people’s privacy.

“In our opinion, this massive interference with the rights of our users is not only in conflict with data protection, but also with the German constitution and European law,” said Sabine Frank, Head of Government Affairs and Public Policy for the German-speaking countries at Google’s YouTube unit.

Google says that once personal data has been forwarded to the police under the hate-speech law, it cannot be withdrawn. Additionally, providers are not allowed to inform people whose data has been passed on to the police. The company notes that even people who behave lawfully risk having their data stored in a police database.

The company believes the kind of personal data transfer required under the hate-speech law needs court approval. It has filed its complaint with the Cologne Administrative Court.

Jefferies analyst Brent Thill recently reiterated a Buy rating on Alphabet stock and raised the price target to $2,950 from $2,850. Thill’s price target suggests 11.83% upside potential.

“GOOGL has outperformed major indices YTD as investor sentiment turned positive. Our checks have continued to be broadly positive, in particular benefiting from return of 2021 ad budgets. GOOGL is among our favorite large cap picks as we believe it should benefit from ad spend recovery, pent-up demand for Google Cloud,” commented Thill.

Consensus among analysts is a Strong Buy based on 11 Buys and 1 Hold. The average Alphabet price target of $2,890.45 implies 9.57% upside potential to current levels.

GOOGL scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.