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EU Record Fine Just the Tip of the Iceberg for Google as Antitrust Problems Weigh on Stock



Google is one of the most recognized and successful companies in the world. While regarded as a search engine, Google does SO much more than that — including retail sales. And while Google has come under fire in the past for questionable practices, the latest action by the European Commission has stated a clear message: Google has officially crossed the line into antitrust territory. The European Commission levied a record $2.7 billion fine against Google for illegal competitive advantages. And while that fine may be enormous, there are bigger issues for Google to worry about

How Will This Affect Google Stocks?

Google’s stock has been rising for years.

No surprise there.

When your company becomes a verb for the very service it offers (hang on, I’ll Google that for you!) then you know the company is doing well. But Google is more than that. The king of search engines also has its hands in the internet of things, online retail, and offline technology. That’s why Google produced more than $90 billion in revenue last year.

But that’s all coming under fire now as Google was slapped with a $2.7 billion fine for distorting the online market. Basically, Google would put its shopping results ahead of other, more relevant (and accurate) results.

As a result, Google has to change its practices within 90 days or face a penalty of 5% of its parent company Alphabet's average daily worldwide earnings, which comes out to about $14m a day. The commission is leaving it to Google to determine what changes have to be made instead of instructing Google what to specifically change.

Google Search | EU Record Fine Just the Tip of the Iceberg for Google as Antitrust Problems Weigh on Stock

Image via Visual Hunt

While the fine is huge, the bigger issue for Google is the ruling’s impact on the company’s future operations. Google produces so much revenue based on monetizing search results through keywords and sponsored ads. If Google has to change the appearance and algorithm of its results and rankings, there could be a steep financial drop.

Watch the news from Fox Business regarding EU's fine on Google:

Google parent company Alphabet can afford the fine without a problem, but the future loss of revenue could hurt the company. However, Google is a brilliant, innovative company, and should bounce back without any problems.

Learn how Guy Cohen trades with uncertainty laced with opportunity as earnings loom right here.

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Featured image via Visual Hunt

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