The U.S. Department of Justice (DOJ) is urging the federal judge overseeing the case to compel Alphabet (GOOGL) divest its Google Ad Tech business to cede monopoly. Last week, the judge found that Google had indeed sought anticompetitive practices to maintain dominance in two online ad-tech markets. The judge has set a date of September 22, for the next phase of remedial trials related to the antitrust lawsuit.
Google’s AdX is an online marketplace where publishers and advertisers can buy and sell their ad inventory through a real-time bidding (RTB) process. On the other hand, Google’s DFP (DoubleClick for Publishers) is a comprehensive platform that enables publishers to store, manage, and sell their ad inventories, as well as manage ad campaigns targeting specific audiences. In 2018, Google rebranded DFP as Google Ad Manager and also integrated the AdX function into the same.
Potential Remedies to Break Google’s Ad Dominance
Last week, both parties presented their proposed remedies for breaking Google’s alleged Ad tech monopoly. While Google suggested more behavioral remedies, the lawyer representing the DOJ said that “Behavioral remedies are not sufficient because you can’t prevent Google from finding a new way to dominate.”
The DOJ is pushing for divesting Google’s Ad Manager business to restore competition in the ad-exchange and publisher ad-server markets. Meanwhile, Google proposed remedies such as making its real-time bids available to competitors, to keep competition alive. Google said it would also agree to monitoring to guarantee any commitments made to satisfy the judge’s findings.
Notably, Google is opposed to structural remedies, including spinning off its ad tech business, because it believes such extreme measures “would harm publishers and advertisers.” Google also argues that these divestment calls go beyond the context of the court’s findings. In contrast, the judge has urged both parties to mediate and reach a compromise solution, instead of undergoing a prolonged and costly trial process.
Unfortunately, the tech giant is facing tremendous pressure to prove its fairness and competitive stance in the markets it operates. Google has also lost another landmark case alleging it of dominating the online Search market. The DOJ is also pushing for Google to sell its Chrome browser as a remedy to break its dominance in online search.
Is Google a Safe Stock to Invest In?
Despite the ongoing challenges, analysts remain highly bullish about Alphabet’s long-term stock trajectory. On TipRanks, GOOGL stock has a Strong Buy consensus rating based on 29 Buys and nine Hold ratings. Also, the average Alphabet Class A price target of $199.17 implies 21.3% upside potential from current levels. Year-to-date, GOOGL stock has lost 13.1%.
