One of the DOJ’s remedies call for the company to divest its Google Chrome browser.
Shares of Alphabet (NASDAQ:GOOG) stock are down about 5% this week after the latest chapter unfolded in the U.S. Justice Department’s case against Alphabet’s Google.
The DOJ’s long-running antitrust case against Google took a huge step forward last August when a federal judge ruled that Google had created an illegal monopoly with its search engine.
Then in November, President Joe Biden’s DOJ filed a document with remedies for Google’s violation, and one of them was forcing the company to divest some of its assets, including the Google Chrome search engine. Alphabet vowed to appeal the rulings and remedies.
Now, with a new administration in Washington, the case continues. President Donald Trump’s DOJ picked up the case, filing a document on March 7 with its revised proposed final judgment.
The DOJ’s revised final judgment says Google’s “illegal conduct has created an “economic goliath” that “wreaks havoc” on the marketplace. And it makes clear that it wants Alphabet to sell off Google Chrome.
“The American people’s reliance on Google’s search engine is well-known. Less understood, however, is how Google—through its unlawful and unchecked, monopolistic conduct over the past decade—secured the American people’s reliance. Google’s anticompetitive conduct has denied users of a basic American value—the ability to choose in the marketplace,” the filing states.
DOJ calls for Google to divest Chrome browser
The new filing reaffirms two remedies from the initial filing last fall. One, they upheld the prohibition on search-related payments to distribution partners, which, the DOJ says have “frozen the ecosystem for over a decade,” raised barriers to new entry, and created a system dependent on Google’s monopoly payments.
In addition, the revised final judgement reaffirms that “Google must divest the Chrome browser—an important search access point—to provide an opportunity for a new rival to operate a significant gateway to search the internet, free of Google’s monopoly control.”
One change by the Trump DOJ is that it is no longer seeking the mandatory divestiture of Google’s AI investments.
“DOJ’s sweeping proposals continue to go miles beyond the court’s decision, and would harm America’s consumers, economy and national security,” a Google spokesperson said, according to Wired.
Analysts at J.P. Morgan said the DOJ’s remedies “remain comprehensive and mostly maintain the punitive posture” of the initial remedies, according to the Fly. But J.P. Morgan maintains its overweight rating on Alphabet with a $220 price target. The stock is currently trading at $166 per share, so that would be 31% upside.
In fact, Alphabet stock’s median price target is $220 per share, so analysts still see it as a buy.
Alphabet has previously vowed to appeal the ruling, so its is likely this will be tied up in courts for a while, if it even does ultimately materialize.
Investors should have this ruling in the back of their minds and watch it closely. But right now, Alphabet stock is really cheap with a P/E of 20 and has some solid upside potential.
