🥇 First rule of investing? Know when to save! Up to 55% off InvestingPro before BLACK FRIDAYCLAIM SALE

BofA says 'some positives to consider' after Google threatened with break up

Published 10/10/2024, 11:44
© Reuters
GOOGL
-
GOOG
-

Investing.com -- Bank of America analysts weighed in on the Department of Justice's (DOJ) proposed remedies against Alphabet (NASDAQ:GOOGL)'s (Google) alleged monopoly in search services, highlighting "some positives to consider" despite the potential threat of a breakup.

Google shares dropped 1.6% following the news, while the S&P 500 rose 0.7%.

The DOJ outlined an extensive list of potential measures aimed at addressing Google's dominance in search, including terminating exclusive agreements with partners like Apple (NASDAQ:AAPL) and Samsung (KS:005930), limiting data tracking, forced data sharing, and even the possibility of divesting key assets like Chrome and Android.

In a note Thursday, BofA analysts said the aggressive list was expected based on earlier reports but also cautioned that this is just the initial step in a lengthy legal process.

Alphabet has expressed concerns about the DOJ's broad demands, pointing out that the proposal comes at a time when competition in search is growing, especially with AI transforming the landscape.

BofA highlighted that a final judgment isn't expected until the first half of 2025, with appeals potentially stretching the case into late 2026.

Despite the looming legal battle, BofA sees several positives. First, they believe Google is still well-positioned in the search market, noting that users would likely choose Google even without exclusive agreements.

"Drawing a parallel to the Microsoft (NASDAQ:MSFT) case, an initial breakup was recommended, but it was ultimately overturned and led to a settlement. We anticipate more twists and turns in the case ahead," said the bank.

Additionally, they said Alphabet's counter proposals due in December could offer a more favorable outcome.

The bank also highlighted that Alphabet trades at a discount to its breakup value, and with minimal layoffs compared to peers, they see room for EPS growth under the new CFO.

Overall, while challenges remain, BofA maintains a Buy rating on Alphabet with a price target of $206.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.