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Business October 21, 2020 3 mins read

Google is hit with big antitrust case, why are Alphabet (GOOG, GOOGL) shares rising?

Business ı By Dee Dulfo

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Google-Search Engine-Australia

The shares of Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL), the parent holding company of Google seemed unfazed despite the biggest U.S. antitrust case hitting the search engine giant.

On Tuesday, the Department of Justice (DOJ) and 11 states filed an antitrust lawsuit against Google alleging that the company is utilizing monopoly power in the web search market to lock out competitors.

The lawsuit lodged by the DOJ is the first to emerge from the agency’s probe into massive tech companies like Google, Facebook, Amazon, and Apple.

This marks the government’s most significant antitrust move since its groundbreaking suit against Microsoft more than two decades ago.

Alphabet's Class A shares (GOOGL) climbed from $1,529.95 each on Monday to $1,551.08 each on Tuesday. The stock price of GOOGL remains upward on Wednesday, trading around $1,603.80 per share, up by 3.40% at the time of this writing in New York.

Alphabet's Class C (GOOG) shares rose from $1534.61 each on Monday to $1,555.93 each on Tuesday. The shares are also climbing on Wednesday, trading around $1,612.80 each, up by 3.66%.

Google/Alphabet

Another "loser" case against Google

Investors already expected major surprises and many elements from the lawsuit. It has been reported that the DOJ would focus on Google’s search default deals and Wall Street experts had written research about this, according to Bloomberg.

The media outlet also noted speculations that any eventual remedies won’t have a lasting impact on Google’s ability to make money from its leadership in search advertising.

On the other hand, CNBC’s Jim Cramer said Alphabet would go from a “buy to a strong buy” if the case against its Google unit were to lead to a break-up.

“I just think it’s another ‘loser case’ by the government. And by the way, the sum of the parts is worth far more than $1,500,” Cramer said.

The DOJ will be having a hard time proving its case that Google abused its market power in its search and advertising business, the Mad Money host said.

Alphabet shareholders, Cramer said, would emerge as winners if the government were to force Google’s parent to split up.

“I’ve been saying over and over again, they ought to break this company up and bring out value. It’s the DOJ taking it from buy to strong buy,” he said.  “Ultimately, Google, if they break it up, then you own the stock. If they don’t break it up, then you own the stock. It’s a pretty good situation.”

The government, at the end of the day, could force Google to halt paying billions of dollars to its partners like Apple to make its search engine the default on their devices.

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Dee Dulfo

Dee is a journalist and a news anchor. He enjoys traveling the world with just a backpack.

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