Google's Chances Of Fines In Search, AdTech Lawsuits 'Relatively Low': Analyst

Alphabet Inc. GOOGLGOOG, which owns dominant search engine Google, may not get penalized for two out of three antitrust suits it is currently facing, according to an analyst.

“The likelihood of GOOGL walking away with a penalty or fine is relatively low,” Roth MKM analyst Rohit Kulkarni wrote in a note on Thursday.

On Aug. 5, a federal judge ruled against Alphabet in an antitrust lawsuit tied to the company’s Search dominance.

Judge Amit Mehta ruled Alphabet's payments to make its search engine the default option on smartphone web browsers violates U.S. antitrust law by blocking the competition.

Antitrust regulators alleged Alphabet kept a monopoly on online search and related advertising through $26 billion in payments to Apple Inc. AAPL, Samsung Electronics and other smartphone makers over multiple decades for top positioning on browsers and mobile devices.

In early February, Google was hit with a 2.1 billion euro ($2.3 billion) lawsuit by 32 media groups including Axel Springer and Schibsted, alleging that they suffered losses due to the company’s practices in digital advertising.

The move by the group, which include other publishers across Europe, came as antitrust regulators also cracked down on Google’s ad tech business.

Kulkarni came to this conclusion on the Alphabet suits after hosting a webinar earlier this week with three advertising industry veterans to gather insights and predict the next steps in Google’s Search and Adtech lawsuits.

He said there are “very limited remedies in sight” for the Search trial, which could take over a year to reach full resolution.

“Google has already announced it will appeal the ruling, which it is likely hoping to take near-term precedence over the separate mini-trial for remedies,” he said.

“Speakers noted that Google’s deal with Apple to become default Search engine could come under additional scrutiny.”

He also said Google might play “the waiting game” by turning these two cases into marathons with hopes of setting finish lines under more favorable White House administrations.

“Although this may be the closest Google has ever been to serious antitrust repercussions, it is important to note that its no-wrongdoings argument has stayed consistent,” Kulkarni said.

But there are several unknowns for both cases, and his panelists said it is too early to make predictions on the timeline.

“The three panelists agree that a Google Network spinout could be viewed as a favorable outcome for Google,” he wrote.

“A scenario where Google can negotiate the two monopoly lawsuits into a singular remedy is not out of the picture, although offering up the shrinking Network business would probably not satisfy the courts.”

He said they also discussed how a breakup of the Adtech segment could play out, but that might not be technically possible since AdSense, AdXchange and Ads Manager are interconnected.

“A multi-billion dollar fine on the other hand would be another hopeful option for Google, but one of this size has never been seen before and, again, might not satisfy the courts,” he said.

Yelp has filed an antitrust lawuit against Alphabet after a recent federal ruling called Google a monopolist.

In this suit, Yelp accused Google of keeping its monopoly in local search services by favoring its vertical over those of competitors. Yelp argued that this has hurt competition and lowered the quality of local search services.

The lawsuit, filed in the Northern District of California, demands that Google cease its allegedly anticompetitive conduct and seeks damages. Yelp has requested a jury trial.

Yelp argued Google's behavior ultimately harms consumers and advertisers by stifling competition and allowing Google to charge higher fees with minimal consequences.

GOOGL Price Action: Alphabet gained 0.88% to $164.27 Thursday at publication.

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