The U.S. wants the European Union (EU) to urgently clarify its position on rules limiting the actions of American technology stocks, as Google parent Alphabet (GOOGL) faces a big fine for allegedly breaching the bloc’s laws. According to Reuters, U.S. House Judiciary Chair Jim Jordan wrote to EU antitrust chief Teresa Ribera requesting details of how the bloc enforces regulations that appear to target American tech companies such as Amazon (AMZN), Microsoft (MSFT) and Facebook owner Meta Platforms. (META).
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
“Overseas Extortion”
It comes days after President Donald Trump said his administration would scrutinize the EU’s Digital Markets Act (DMA) and the Digital Services Act (DSA), which set strict rules on how technology firm operate. Trump signed a memorandum on Friday to “defend American companies and technology from overseas extortion.”
Following this move, in a letter seen by Reuters, Jordan suggested that the DMA “may target American companies” and was stifling innovation. The Judiciary Chair also criticized the EU for imposing hefty fines on companies that breach rules, which he said amounted to a “European tax on American companies.”
The letter comes after it was reported the EU is about to charge Alphabet with breaching rules designed to stop its search results favoring its own services.
U.S. and Europe Diverge
While the EU has been investigating Alphabet since March, it comes amid heightened tensions with the U.S. over tariffs, trade, the Ukraine war and regulations over areas such as the climate and artificial intelligence.
Last week for instance executives from Meta and Google criticized the EU over its perceived failure to foster innovation in AI, adding further weight to hard-hitting comments from Vice President JD Vance at the Paris AI summit.
META has also been subject to investigations after it was accused of violating the EU’s Digital Markets Act (DMA) with its “pay-or-consent” advertising model, prompting moves by the company to fall in line. However, the social media platform’s revised no-ads subscription service may still be in breach of EU consumer and privacy laws, in addition to antitrust rules, according to the European Consumer Organisation, a consumer watchdog.
Failure to comply with the DMA entails fines up to 10% of global annual revenue, which was about $350 billion for Alphabet last year, suggesting it could be fined as much as $35 billion. META boss Mark Zuckerberg recently stated that American tech companies operating in Europe had paid more than $30 billion in fines over the last two decades, suggesting a full fine of 10% of Alphabet’s revenues would mark a major escalation by the EU authorities.
Meanwhile, it’s also been noted that the EU’s mooted response to U.S. tariffs could include use of a further piece of legislation to target big tech stocks. The EU could lead on the “anti-coercion instrument” (ACI), a powerful tool that was devised in 2023 as a deterrent to China but now could now form a key part of Europe’s defense against U.S. trade measures. The ACI provides the EU a wide range of possible countermeasures against economic “coercion,” including the imposition of tariffs and restrictions on trade in services.
The letter from House Judiciary Chair Jim Jordan to Ribera, the top EU antitrust official, requests she brief the committee by March 10th.
Is GOOGL Stock a Good Buy?
On Wall Street, analysts have a Moderate Buy consensus rating on GOOGL stock based on 27 Buys and 10 Holds assigned in the past three months. After a 25% rally in the past 12 months, the average GOOGL price target of $215.85 per share implies nearly 20% upside from current levels.
