Alphabet Stock Takes a Beating As the DOJ Proposes Breaking Up Google and Selling Off Chrome

Alphabet stock closed at $128.40 last Thursday, which meant a drop of 4.5% or more than $6 per share in value. The decline followed the Department of Justice’s (DOJ) announcement of proposed remedies to curb Google’s monopolistic practices. In after-hours trading, Alphabet stock continued its downward trend by falling an additional 1.5% to approximately $126.45. This extended decline reflects investor apprehension regarding the potential impact of the DOJ's proposed measures on Alphabet's business operations. Among the DOJ’s most significant recommendations called for the divestiture of Chrome, Google’s flagship browser/ However, doing so could dramatically reshape Alphabet’s core business model.

The DOJ’s proposals follow a September ruling by U.S. District Judge Amit Mehta, which found Google guilty of monopolizing the search market. Judge Mehta cited Google’s practice of paying billions to companies like Apple to remain the default search engine on devices as a primary factor. The proposed remedies go beyond financial penalties, signaling a potential restructuring of one of the world’s most powerful tech firms.

The DOJ Demands Are a Threat to Alphabet’s Core Business

The DOJ’s most significant demand is for Google to sell its flagship Chrome browser, which commands 67% of the global browser market. Chrome is a vital tool for Alphabet, connecting users to its search engine, advertisements, and AI tools like Gemini. Losing the browser would disrupt Google’s ecosystem and reduce its ability to dominate the digital ad space, which can lead to a weakened market position. Already, investors are pulling away from Alphabet stock at the mere suggestion of Google spinning off its Chrome browser. 

Other proposed remedies include barring Google from paying for default search engine status on devices, restricting its investments in AI, and requiring transparency in search data to level the playing field for competitors. While these measures aim to increase competition, they could also dismantle key components of the company’s business. The extent of how these punitive measures will affect Alphabet stock remains to be seen. 

Alphabet Calls Proposals “Extreme”

Alphabet has criticized these proposals, calling them “extreme” and harmful to American consumers and innovation. Kent Walker, Alphabet’s chief legal officer, argued that the remedies would weaken the country’s global technological leadership. Despite Alphabet’s pushback, regulators remain determined to address Google’s monopolistic practices, potentially setting a precedent for future cases against other tech giants.

The incoming Trump administration could influence the trajectory of this antitrust case. Although the lawsuit began during Trump’s first term, it advanced under President Biden. Trump has historically criticized Big Tech while also advocating for reduced regulation. If the administration shifts its stance, Alphabet could benefit from a more business-friendly approach. However, bipartisan support for limiting Big Tech’s influence may prevent significant leniency.

Investors Brace for an Uncertain Future for Alphabet Stock

The DOJ’s remedies, if enforced, would pose a significant challenge to Alphabet’s business strategy. Investors are already reacting, with Alphabet stock reflecting the uncertainty surrounding its future. Divesting Chrome alone could alter Alphabet’s revenue streams, while restrictions on search engine practices might reduce its competitive edge.

Judge Mehta is expected to rule on the proposed remedies by August 2025. Until then, Alphabet faces a long period of regulatory scrutiny and legal battles. Whether the company can adapt and maintain its dominance in a more competitive environment remains to be seen. In the meantime, expect Alphabet stock to continue its bumpy ride downwind.

Will Alphabet and Google survive this antitrust suit? How soon do you think Alphabet stock will recover? Tell us what you think.

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