Google (GOOGL) could be heading for a break-up of its businesses. In a filing on Tuesday, the U.S. Department of Justice (DoJ) made some key recommendations for Google’s search engine business practices. These recommendations indicate that the U.S. DoJ is seriously considering a potential breakup of the tech giant as an antitrust remedy.
What Are the U.S. DoJ’s Recommendations for GOOGL?
In its filing, the DoJ outlined various possible actions, stating that various measures might be necessary to “prevent and restrain monopoly maintenance.” These could include contractual obligations, product requirements, and stricter data and interoperability standards. Most importantly, the DOJ also mentioned “structural requirements,” a reference to the possibility of dismantling parts of Google’s vast business.
The DOJ’s concerns extend beyond just search engines. It pointed out that Google has used products like its Chrome browser, GOOGL Play store, and Android system to boost its search-related services. The Department added that these products and Google’s growing integration of artificial intelligence are seen as tools for maintaining its dominance.
Furthermore, the DoJ has proposed that Google share its search index data, including information from its AI-assisted search features, with its competitors.
How Does GOOGL Edge Out Its Competitors?
It is important to note that the tech giant has entered into deals with other tech giants like Apple (AAPL) to ensure that Google remains the default search engine on its devices. Considering these agreements, the DOJ has suggested limiting or prohibiting such default agreements and has proposed a “choice screen,” allowing users to select from various search engines.
Why Has the U.S. DoJ Made Such Recommendations?
The U.S. DoJ’s recommendations come after a ruling earlier this year where a U.S. judge found that Google holds a monopoly in the search market. The court determined that Google had maintained its dominant position by creating high barriers to entry that sustained its control over the search engine market. This was a violation of the Sherman Act, which prohibits monopolies.
However, Google plans to appeal the ruling, and any final impact may not be felt for years.
Is Google Stock a Buy or Sell?
Analysts remain bullish about GOOGL stock, with a Strong Buy consensus rating based on 30 Buys and nine Holds. Over the past year, GOOGL has increased by more than 15%, and the average GOOGL price target of $201.64 implies an upside potential of 22.7% from current levels.
