Proactive Investors - The US Justice Department is reportedly considering breaking up Alphabet (NASDAQ:GOOGL) Inc (NASDAQ:GOOG)'s Google after a court ruled the company illegally monopolized the online search market.
Sources with knowledge of the matter told Bloomberg that officials are considering various proposals to remedy Google’s antitrust violations, including breaking off parts of the company, such as its Chrome browser or Android smartphone operating system.
Other proposals being considered include requiring Google to make its data available to its competitors or forcing it to walk away from agreements that make its search engine the default option on devices such as Apple’s iPhone.
Analysts at Wedbush believe the DOJ pursuing the breakup of Google would be “a stretch,” also highlighting that Google will appeal the ruling.
“Google has announced that it plans to appeal the decision. It may take several quarters and possibly years for a final outcome to be reached, and we do not expect any disruption to Google's near-term operations as a result of this ruling,” they wrote in a note to clients.
“The DOJ has not formally communicated what possible remedies it may pursue, and proceedings will likely be held in the coming months to determine potential remedies.”
However, the analysts see the “Big Tech versus Beltway battle” as well underway, taking a stronger stance as the AI revolution takes hold.
“Google's win last week was a huge notch on the belt for the DOJ and now Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Meta (NASDAQ:META) and others will be the focus,” they wrote.
“We continue to believe a breakup of the Big Tech business models is highly unlikely down the road although business model tweaks and heavier scrutiny of M&A will be front and center.”
The analysts concluded: “We view the regulatory landscape for tech as gaining some momentum over the next year, although the impacts to the business models of the tech stalwarts we believe to be relatively insulated for now and the Street will continue to view this as a background risk for the tech sector as it all plays out in the court system.”
Shares of Google’s parent Alphabet traded lower following Bloomberg’s report, down 3.1% at $160 late morning on Wednesday.