US state prosecutors are weighing whether to force Google to sell its dominant Chrome browser and parts of its lucrative advertising business as they are investigating the search giant for alleged antitrust violations, Politico reported.
The US Justice Department and state prosecutors investigating Google (GOOGL) are considering the possibility as they are gearing up for an antitrust legal battle that the Department of Justice (DOJ) is expected to begin in coming weeks. The forced sales would be major setbacks for Google, which uses its dominance of the world’s most popular web browser to aid the search engine that is the key to its income, according to the report.
US prosecutors have called upon advertising technology experts, industry rivals and media publishers for potential steps to weaken Google’s grip, but no final decisions have been made yet. The Chrome browser, which Google introduced in 2008 and has the largest market share in the US, has been at the center of rivals’ criticisms claiming that the search giant uses its access to users’ web histories to support its advertising business.
Separately, the DOJ is putting together an antitrust suit alleging that Google is abusing its control on the online search market, which the department could file as soon as next week, according to the report. Targets of that complaint are expected to include the ways Google uses its Android mobile operating system to help entrench its search engine.
Shares in Google have recouped all of this year’s earlier losses and are now trading 13% higher than at the start of the year. What’s more, the average analyst price target of $1,781.09 indicates shares have room to advance another 18% in the coming 12 months.
Monness analyst Brian White this month reiterated a Buy rating on the stock with a $1,700 price target, while noting that “in recent weeks, media reports have sounded the alarm about Google’s antitrust issues escalating in the coming months.”
“Although we expect Alphabet’s [Google] will continue to grapple with digital ad spending trends and wrestle with antitrust investigations, we remain optimistic about Google Cloud and Google Play, combined with the company’s longer-term position in a world that will become much more digital,” White wrote in a note to investors. “We believe Alphabet should trade at a healthy premium to the market and tech sector.”
However, the analyst believes that due to the COVID-19 impact on the economy and the digital ad spending environment Google’s earnings will be be depressed in the coming quarters and revenue growth will be well below historical trends.
Overall, Wall Street analysts remain bullish on the stock. The Strong Buy analyst consensus boasts 32 Buys versus 2 Holds. (See Alphabet’s stock analysis on TipRanks)
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