Analysts rework Google parent price target on search, antitrust concerns

It became reasonably a year for words.

In 1601, "abrasive," "divestiture" and "theoretical" were among a couple of words that were used for the first time in print, in step with Merriam-Webster.

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The word "monopolist" — which implies one who monopolizes — also made its debut that year. And 423 years later on Aug. 5, U.S. District Judge Amit Mehta used that very term in his ruling that found Google's parent, Alphabet (GOOGL) , violated U.S. antitrust law with its search business.

“After having moderately considered as and weighed the witness testimony and evidence, the court reaches the next conclusion: Google is a monopolist, and it has acted as one to appear after its monopoly,” Mehta wrote in his opinion.

Kent Walker, Google’s president of worldwide affairs, said the corporate intended to appeal Mehta’s findings.

Which is one among a couple of cases that the quest, advertising and cloud-services giant is contending with in the U.S. to boot to Europe, as regulators look to rein in the tech sector.

"Because the tech world awaits the following steps all over the place this landmark case, the choice gives US government enforcers momentum in their broader antitrust challenge to Big Tech," attorneys at Goodwin Procter wrote in an Aug. 14 post.

Alphabet battling a couple of legal battles

"The [Department of Justice] is currently engaged in litigation against Apple, alleging that Apple has used its monopoly in the smartphone market to stifle competition and raise prices," the firm added.

The post also noted that the Federal Trade Commission has recently filed antitrust complaints, accusing Amazon (AMZN) of illegally asserting its monopoly position in the web retail industry and Facebook parent Meta Platforms (META) of illegally thwarting competition through its acquisitions of Instagram and WhatsApp.

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"And lurking on the back of Judge Mehta’s latest decision is the impact of AI technology in online markets, which has already begun to face scrutiny from antitrust regulators worldwide," the post said.

An engaging component to the Court’s opinion is its discussion of the upward thrust of man-made intelligence and concern that Google would use its market power to stifle competitors in the AI market, the firm said.

Goodwin Procter cited Microsoft (MSFT) CEO Satya Nadella’s testimony warning of a “nightmare” scenario if Google’s search term dominance continues, given Google’s vast trove of search data and its value in training AI.

TheStreet's Versace: Alphabet litigation a long process

TheStreet Pro’s Chris Versace wrote in August that whatever the eventual is, “we predict take a very long time period, likely measured in years.”

“We predict Alphabet/Google will appeal these rulings just like we saw when the DoJ put the bullseye on Microsoft back in the late Nineties,” he said. “That suit, which started in May 1998 and looked to break up Microsoft, became at last settled in mid-2004 following Microsoft’s appeal of the June 2000 verdict and its November 2001 agreement with the DoJ.”

At some point of the coming Three hundred and sixty five days, Versace said he would continue to appear after the fundamentals of the quest and advertising and cloud businesses, and Google’s AI ambitions.

"It is going to thoroughly come the total way down to Google writing a large check and making some modest policy/operations revisions," he added.

Meanwhile, on Sept. 10, the corporate lost its final legal challenge against a European Union penalty for giving its own shopping recommendations an illegal advantage over rivals in search results.

The EU’s Court of Justice upheld a lower court’s decision, rejecting the corporate’s appeal against both.four billion euro — $2.7 billion — penalty from the European Commission, the 27-nation bloc’s top antitrust enforcer.

One day earlier, the U.S. Justice Department, joined by a coalition of states, and Google each and each made opening statements to a federal judge in Alexandria, Va., who will decide whether Google holds a monopoly over web advertising technology.

Analyst: Search is 'still Google's game to lose'

The corporate shall be being sued by longtime rival Yelp (YELP) , which accuses Google of the use of its dominance to govern the local search market.

Alphabet is scheduled to report third-quarter results next month. Year-to-date, the corporate's shares are up nearly 13% and are almost 15% higher from a year ago.

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Investment firms issued research reports on Alphabet on Sept. sixteen, including Truist, which affirmed a buy rating and $196 price target on the corporate after web hosting an expert call regarding generative-AI and its impact on search.

While gen-AI is transforming se's like google and yahoo into answer engines, upending a $220 billion industry and perilous Google's hegemony by fueling the emergence of AI-native platforms like OpenAI and Perplexity, that is "still Google's game to lose", the firm said.

Truist further notes that it sees an out of the ordinary deal of gen-AI search volume as "incremental, not cannibalistic." And the firm says Google will continue to dominate monetizable core search in the near-to-medium term given its advertiser scale, brand and trove of proprietary transactional data.

Evercore ISI analyst Mark Mahaney lowered the firm's price target on Alphabet to $200 from $225 while asserting an outperform rating on the shares.

The analyst said that "probable medium-term uncertainty" over the Department of Justice antitrust trials and their likely remedies will limit the prospective for any near-or medium-term subject material rerating of the shares.

Following a call with a legal expert, Mahaney said a "worst-case" scenario is more likely than the market assumes.

A worst-case scenario should be one wherein Google won't ever be from now on allowed to bid for exclusive search distribution deals in the U.S., and any other company like Microsoft buys out its exclusive search distribution deals, Mahaney said.

It is going to spark off a subject material share loss by Google on the quest get entry to points covered by those distribution deals, which amounts to roughly 1/2 the U.S. search market, he added.

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