Yelp (YELP), the online review platform, has filed a lawsuit against Alphabet’s (GOOGL) Google, alleging that the tech giant leveraged its dominant position in the local search market to stifle competition. This legal action came on the heels of the U.S. government’s landmark antitrust victory against Google, encouraging other firms to challenge the tech giant’s anticompetitive practices.
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The lawsuit alleged that Google’s monopoly in general search allows it to unfairly favor its own local search and advertising products over those of its competitors. This anti-competitive behavior is said to have limited rivals’ customer reach, forcing them to pay Google exorbitant fees.
Importantly, Yelp claimed that GOOGL’s unfair practices have greatly impacted its business. Yelp relies heavily on local search advertising revenue, but Google’s self-preferencing tactics divert traffic from specialized providers like Yelp, significantly harming its revenue.
Google’s Other Legal Troubles
Yelp’s lawsuit followed a recent federal court ruling that found Google had violated antitrust laws. The U.S. District Judge Amit Mehta ruled that Google monopolized the search market through exclusive deals with Apple (AAPL) and Samsung (SSNLF).
This legal setback for Google is expected to have significant repercussions for the digital ad market.
With this background, let’s take a look at what Wall Street analysts think about these two companies.
Is Yelp Stock a Buy?
Overall, Yelp has a Moderate Buy consensus rating on TipRanks. This is based on two Buy and four Hold recommendations. Analysts’ average price target on Yelp stock is $44.40, implying a 29.11% upside potential from current levels. The stock declined 10.5% in the past six months.
Is Alphabet a Buy or Sell?
On TipRanks, GOOGL has a Strong Buy consensus rating based on 28 Buys and seven Holds assigned by analysts in the past three months. After a 17.8% gain in share price in the past six months, the analysts’ average price target on Alphabet stock of $205.03 implies a 25.9% upside potential.
