In another setback for Google (GOOGL), the UK’s competition watchdog has announced that it will launch a formal antitrust investigation into Google’s search and advertising practices. This move is an attempt by the Competition and Markets Authority (CMA) to enforce the UK’s new Digital Markets, Competition and Consumers Act (DMCC).
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The DMCC is a law that aims to curb anti-competitive behavior in digital markets. This law empowers the CMA to identify companies with “strategic market status” (SMS). If the UK regulator designates companies with the SMS status, the companies could face regulatory measures aimed at changes to prevent anti-competitive behavior.
UK’s CMA Comments on the Investigation
Sarah Cardell, the CMA’s chief executive, stated that the CMA was investigating Google’s dominance in the search market as artificial intelligence changes the way people search for topics online, and wants to ensure a “level playing field.”
Furthermore, Cardell commented, “It’s our job to ensure people get the full benefit of choice and innovation in search services and get a fair deal — for example in how their data is collected and stored.” She further highlighted the need to support businesses of all sizes, ensuring fairness for rival search engines, advertisers, and news organizations.
GOOGL Is Increasingly Under Scrutiny
This investigation follows a broader scrutiny of Google’s market dominance in the search space. In the United States, the Department of Justice has intensified efforts to challenge the tech giant’s dominance, including a bid to force Google to divest its Chrome browser due to its monopoly in the search market.
Is Google a Buy, Hold, or Sell?
Analysts remain bullish about GOOGL stock, with a Strong Buy consensus rating based on 24 Buys and seven Holds. Over the past year, GOOGL has increased by more than 30%, and the average GOOGL price target of $215.75 implies an upside potential of 13% from current levels.
