Alphabet’s (GOOGL) (GOOG) Google faces yet another antitrust trial by the U.S. Justice Department for its ad tech dominance. The federal government lawsuit claims Google is monopolizing the ad tech market by controlling both customers and competitors. This is the second big antitrust trial for Google in over a month after the company lost a case to the DOJ over its Search dominance.
Advertising technology, or ad tech, helps advertisers engage in targeted advertising and maximize their return on investment from ad spending. Google’s advertising business contributed over $200 billion in revenues in Fiscal 2023 and continues to be a major driving force for the company.
Details of Google’s First Hearing
The U.S. District Judge Leonie Brinkema heard the opening comments from both sides yesterday in Alexandria, Virginia. Prosecutors for the DOJ alleged that Google is using its mammoth size to crush competition by acquiring smaller players, compelling customers to buy its products, and controlling how transactions take place in the online ad market.
Google is accused of restricting publishers and advertisers from using rival advertising tools and underselling to win more contracts. The prosecutors also said that Google is keeping up to 36 cents on the dollar when it acts as a mediator between publishers and advertisers.
Meanwhile, Google’s attorney protested that the DOJ’s allegations are based on a very “narrow” understanding of the ad tech market, which doesn’t reflect reality. The lawyer said that the advertising market is highly revolutionized and competitive, and customers are turning toward social media platforms to channel their ads rather than traditional web services. The lawyer contended that if the trial goes against Google, it will not help small advertisers but rather promote the ad tech markets of social media companies.
Potential Outcome of the Trial
The trial is set to go on for four weeks, following which judge Brinkema will give her final verdict. The case is led by the Justice Department in coalition with 17 states.
If Google loses this antitrust case, it could lead to a penalty of selling off its Google Ad Manager platform, which runs Google’s publisher ad server and ad exchange services. In the prior landmark case lost by Google, the DOJ is considering splitting the Chrome browser or Android smartphone operating system as a remedial measure to end its Search monopoly.
What Is the Price Target for GOOGL Stock?
Despite legal woes, Alphabet has won analysts’ favor owing to its well-established business with several verticals. GOOGL stock commands a Strong Buy consensus rating based on 28 Buys and eight Hold recommendations. On TipRanks, the average Alphabet Class A price target of $204.15 implies 37.3% upside potential from current levels. Shares have already gained 6.6% year-to-date.
