End of Google? Legal Battle against its Dismantling
In October 2024, the U.S. Department of Justice (DOJ) stepped up its approach against Google, signaling that it is considering a possible breakup of the tech giant as part of antitrust action. The case is the latest chapter in a long series of lawsuits against tech giants focused on competition in the search and digital ad markets.
1. Possible Antitrust Actions
The DOJ has stated that it is considering both structural and behavioral remedies to curb Google's monopolistic practices. According to the department, measures that could be taken include:
• Contractual requirements and prohibitions: To prevent Google from continuing to use its products, such as Chrome, Play and Android, to favor its search engine over other competitors.
• Product non-discrimination requirements: Google could be forced to allow competitors to have access to the same opportunities on its platforms, such as access to emerging search and artificial intelligence (AI) features.
• Search distribution agreements: Limit or prohibit exclusive agreements, such as those Google has with Apple and Samsung, that guarantee it to be the default search engine on devices such as the iPhone and other smartphones.
These recommendations come after the ruling in August 2024, where a judge concluded that Google has a monopoly in the search market, violating Section 2 of the Sherman Act, which prohibits monopolies.
2. Potential Effects on Google's Distribution
One of the DOJ's primary concerns is Google's ability to control the distribution of its products and, thus, its dominance in the marketplace. Suggested remedies seek to dismantle the current distribution structure that Google has established, which would include the creation of a “screen of choice” that would allow users to choose alternative search engines without being bound by default agreements with giants such as Apple.
In addition, it raises the need to open up the data within Google's search index, including its AI models, to competitors. This could generate greater equality of access and improve competition in digital advertising.
3. The Impact of the Case and the Possibilities of Dismemberment
Although some legal experts believe that Google will most likely have to eliminate certain exclusive agreements, such as those with Apple to be the default search engine on iPhones, the dismantling of Google seems less likely. This is due to legal complexities and the sheer size of the company, which generates millions in revenue through its search engine and digital advertising. In Q2 2024, Google Search & Other accounted for 57% of Alphabet's revenue at $48.5 billion, underscoring the company's economic power.
Despite the magnitude of the potential penalties, Google has already announced its intention to appeal the ruling, which could prolong the process for several more years. In fact, Judge Amit Mehta indicated that he plans to issue a decision on remedies by August 2025, giving Google time to continue its legal efforts.
4. Global Repercussions and the Impact on Competition
This case has implications beyond the United States. If the DOJ succeeds in imposing significant restrictions on Google, other regulatory authorities worldwide could follow suit. The European Union, which has already fined Google for similar practices in the past, could take additional action.
The case also highlights growing global concerns about the power of large technology platforms and their ability to monopolize key sectors of the digital marketplace. From data management to control of ad platforms, Google remains a dominant player, sparking debate about the need for tighter regulation to ensure fair competition.
Technical Aspect
Google has faced a considerable increase in its results and this growth has caused the stock to recover its price since the end of September. If we look at the appearance of the candlesticks, an inverted shoulder-head-shoulder is forming, this would indicate that the recovery of the stock to its current highs at $193.31 is quite feasible. The current checkpoint is located at 165.47, so we must not lose sight of this possible decision of the regulator that tries to dismember one of the Magnificent 7. If the firm successfully reaches certain agreements and ensures its permanence without dismemberment, probably its next destination will be around $220-$240.
Conclusion: A Future for Google in a Competitive Market?
The case against Google highlights the conflict between business growth and the need to ensure fair and open markets. While a complete takedown seems unlikely, the DOJ's proposed actions could alter the way Google operates, allowing for greater competition in sectors where it has held dominance for more than a decade. With appeals and protracted legal processes, the final impact of these decisions could take years to materialize, but what is clear is that the path to regulation of the tech giants is closer than it has ever been.
In short, this trial not only marks an important chapter in the regulation of Google, but also in the regulation of the entire technology industry, the repercussions of which will be felt for many years to come in the dynamics of global digital competition.
Ion Jauregui - ActivTrades Analyst
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
1. Possible Antitrust Actions
The DOJ has stated that it is considering both structural and behavioral remedies to curb Google's monopolistic practices. According to the department, measures that could be taken include:
• Contractual requirements and prohibitions: To prevent Google from continuing to use its products, such as Chrome, Play and Android, to favor its search engine over other competitors.
• Product non-discrimination requirements: Google could be forced to allow competitors to have access to the same opportunities on its platforms, such as access to emerging search and artificial intelligence (AI) features.
• Search distribution agreements: Limit or prohibit exclusive agreements, such as those Google has with Apple and Samsung, that guarantee it to be the default search engine on devices such as the iPhone and other smartphones.
These recommendations come after the ruling in August 2024, where a judge concluded that Google has a monopoly in the search market, violating Section 2 of the Sherman Act, which prohibits monopolies.
2. Potential Effects on Google's Distribution
One of the DOJ's primary concerns is Google's ability to control the distribution of its products and, thus, its dominance in the marketplace. Suggested remedies seek to dismantle the current distribution structure that Google has established, which would include the creation of a “screen of choice” that would allow users to choose alternative search engines without being bound by default agreements with giants such as Apple.
In addition, it raises the need to open up the data within Google's search index, including its AI models, to competitors. This could generate greater equality of access and improve competition in digital advertising.
3. The Impact of the Case and the Possibilities of Dismemberment
Although some legal experts believe that Google will most likely have to eliminate certain exclusive agreements, such as those with Apple to be the default search engine on iPhones, the dismantling of Google seems less likely. This is due to legal complexities and the sheer size of the company, which generates millions in revenue through its search engine and digital advertising. In Q2 2024, Google Search & Other accounted for 57% of Alphabet's revenue at $48.5 billion, underscoring the company's economic power.
Despite the magnitude of the potential penalties, Google has already announced its intention to appeal the ruling, which could prolong the process for several more years. In fact, Judge Amit Mehta indicated that he plans to issue a decision on remedies by August 2025, giving Google time to continue its legal efforts.
4. Global Repercussions and the Impact on Competition
This case has implications beyond the United States. If the DOJ succeeds in imposing significant restrictions on Google, other regulatory authorities worldwide could follow suit. The European Union, which has already fined Google for similar practices in the past, could take additional action.
The case also highlights growing global concerns about the power of large technology platforms and their ability to monopolize key sectors of the digital marketplace. From data management to control of ad platforms, Google remains a dominant player, sparking debate about the need for tighter regulation to ensure fair competition.
Technical Aspect
Google has faced a considerable increase in its results and this growth has caused the stock to recover its price since the end of September. If we look at the appearance of the candlesticks, an inverted shoulder-head-shoulder is forming, this would indicate that the recovery of the stock to its current highs at $193.31 is quite feasible. The current checkpoint is located at 165.47, so we must not lose sight of this possible decision of the regulator that tries to dismember one of the Magnificent 7. If the firm successfully reaches certain agreements and ensures its permanence without dismemberment, probably its next destination will be around $220-$240.
Conclusion: A Future for Google in a Competitive Market?
The case against Google highlights the conflict between business growth and the need to ensure fair and open markets. While a complete takedown seems unlikely, the DOJ's proposed actions could alter the way Google operates, allowing for greater competition in sectors where it has held dominance for more than a decade. With appeals and protracted legal processes, the final impact of these decisions could take years to materialize, but what is clear is that the path to regulation of the tech giants is closer than it has ever been.
In short, this trial not only marks an important chapter in the regulation of Google, but also in the regulation of the entire technology industry, the repercussions of which will be felt for many years to come in the dynamics of global digital competition.
Ion Jauregui - ActivTrades Analyst
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
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