If you google “recent Alphabet court victory,” you probably won’t get too many hits.
That’s because Google’s parent, Alphabet (GOOGL) , has been facing serious court cases on both sides of the Atlantic.
Related: Analysts reset Alphabet stock price target before key September court event
On Sept. 10 the search, advertising and cloud-services giant lost its final legal challenge against a European Union penalty for giving its own shopping recommendations an illegal advantage over rivals in search results, Time reported.
The European Union’s Court of Justice upheld a lower court’s decision, rejecting the company’s appeal against the 2.4 billion euro — $2.7 billion — penalty from the European Commission, the 27-nation bloc’s top antitrust enforcer.
“By today’s judgment, the Court of Justice dismisses the appeal and thus upholds the judgment of the General Court,” the court said in a news release.
The commission’s original decision in 2017 accused the company of unfairly directing visitors to its own Google Shopping service to the detriment of competitors.
It was one of three multibillion-euro fines that the commission imposed on Google in the previous decade as part of a crackdown on the tech industry.
Alphabet did not immediately respond to a request for comment.
Sundar Pichai, CEO of Alphabet, during an interview on “The Circuit with Emily Chang” at Google’s Bay View campus in Mountain View, Calif., on Wednesday, May 1, 2024. Photographer: David Paul Morris/Bloomberg via Getty Images
Google lawyer: Federal case is a ‘time capsule’
The news from Europe comes just one day after Google’s latest antitrust trial got under way.
The Justice Department, joined by a coalition of states, and Google each made opening statements on Sept. 9 to a federal judge in Alexandria, Va., who will decide whether Google holds a monopoly over online advertising technology, the Associated Press reported.
Related: Alphabet earnings up next with Google parent’s AI costs in focus
Prosecutors alleged that Google has largely dominated the technological infrastructure that funds the flow of news and information on websites through more than 150,000 online ad sales every second.
Google said the government’s case is based on an internet of yesteryear, when desktop computers ruled and internet users carefully typed precise World Wide Web addresses into URL fields.
Advertisers now are more likely to turn to social media companies like TikTok or streaming-TV services like Peacock.
In her opening statement, Google lawyer Karen Dunn likened the government’s case to a “time capsule with a Blackberry, an iPod and a Blockbuster video card.”
Dunn said Supreme Court precedents warn judges about “the serious risk of error or unintended consequences” when dealing with rapidly emerging technology and considering whether antitrust law requires intervention.
Sign up for TheStreet’s free daily newsletter.
Last month, Alphabet suffered a major defeat when a federal judge ruled that Google violated U.S. antitrust law with its search business.
“After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly,” U.S. District Judge Amit Mehta wrote in his opinion.
The contracts have given the company the scale to block out would-be rivals such as Microsoft’s (MSFT) Bing and DuckDuckGo, the U.S. government alleged, CNN reported.
Kent Walker, Google’s president of global affairs, said the company intended to appeal Mehta’s findings.
“This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,” he said.
Analyst says time is on Google’s side
Alphabet is also being sued by longtime rival Yelp (YELP) , which accuses Google of using its dominance to control the local search market.
“Google abuses its monopoly power in general search to keep users within Google’s owned ecosystem and prevents them from going to rival sites,” Yelp CEO Jeremy Stoppelman wrote in a blogpost.
As for Alphabet’s stock, the shares are up 7.2% year-to-date and 10.2% from a year ago.
More Tech Stocks:
Palantir stock leaps on big S&P 500 boost for data analytics groupAnalyst revises Amazon stock price target on advertising estimatesAnalyst says Intel should drop a key business to survive
In July, the company posted a solid second-quarter earnings report. Revenue was $84.74 billion, up 14% from a year earlier and topping the $84.19 billion expected by analysts. Earnings of $1.89 a share were also higher than the $1.84 forecast.
The revenue growth was driven by the company’s search and cloud segments, which were up 14% and 29% year over year, respectively.
Piper Sandler analyst Thomas Champion lowered the investment firm’s price target on Alphabet to $200 from $206 and affirmed an overweight rating on the shares after speaking with an antitrust lawyer to discuss the company’s Department of Justice litigation, according to The Fly.
In his view, the government has successfully argued the merits within two of three cases, but time is on Google’s side.
The Search trial, which is most significant, has a lengthy process of remedies and appeals ahead. Meanwhile, there could be a new administration in the interim and technology is advancing fast.
The firm’s expert characterized the judge’s ruling as “measured,” implying a breakup is unlikely, Champion said.
Piper noted the near-term headline risk, but its valuation work suggests this is priced in and net to a view that the Search case and others amount to a distraction. Long-term investors should use recent weakness to accumulate shares, in the investment firm’s view.
D.A. Davidson initiated coverage of Alphabet with a neutral rating and $170 price target.
As the company faces challenges in its core Search business, its opportunity will migrate to the rest of its portfolio, where its positioning is mixed, the firm said.
Davidson said that it expected Alphabet to continue trading at a discount to other megacap stocks “unless it becomes more aggressive in pursuing those opportunities.”
Alphabet is at a crossroads, where it will either be “Xeroxed” or emerge as a leader in the most important new categories of computing, D.A. Davidson said.
Related: Veteran fund manager sees world of pain coming for stocks
