Tech giant Google (GOOGL) is facing serious pressure from both U.S. and European regulators over its control of the online advertising market. While the company had considered breaking off parts of its ad tech business in order to ease antitrust worries, the U.S. Department of Justice (DOJ) is now pushing for much more. According to Jeannie Rhee, an outside lawyer for Google, the DOJ wants a complete technical split and sale of Google’s advertising exchange, AdX, which is something that she says goes far beyond what Google ever proposed.
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A key hearing is set to begin soon, where a judge will decide if Google has to sell off parts of its ad business. Google argues that its earlier idea of separating some functions is not at all the same as the DOJ’s demand. Currently, Google operates all sides of the ad tech system by helping advertisers buy ads, publishers sell space, and running the exchange that connects them. Previously, the company had offered to move its ad auction unit into a separate business still owned by its parent company, Alphabet, but this wasn’t enough for the DOJ.
Judge Leonie Brinkema, who is overseeing the case, has allowed the DOJ to present limited evidence about whether a technical separation is even possible. She emphasized that “technical feasibility” is the main issue. Meanwhile, both U.S. and EU authorities believe that Google has unfairly favored its own ad tools over competitors. Indeed, earlier this month, the EU fined the company €3 billion ($3.5 billion). In the U.S., the DOJ is asking the court to order Google to sell AdX and make its ad systems compatible with rival platforms.
Is Google Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on GOOGL stock based on 29 Buys and nine Holds assigned in the past three months. Furthermore, the average GOOGL price target of $236.85 per share implies 5% downside risk.
