Analysts say that Google's split may take several years.
According to Zhidao Finance, the stock price of Google parent company Alphabet (GOOGL.US) fell on Wednesday. On Tuesday, it was reported that the U.S. Department of Justice, having won an antitrust case, is considering pushing to split up the tech giant. Last week, Google lost a milestone antitrust case involving its search engine monopoly and contracts that forced partners to make Google their default search option, the largest such competition case in 20 years. The company still faces another antitrust case involving its advertising technology, which is scheduled to begin in September. However, analysts are skeptical about the push for a breakup, believing that such action will not happen quickly, or even at all.
Wedbush points out that the split-up of Google is likely to be "difficult and lengthy" because Google is highly likely to appeal these rulings, which will continue in court for a long time. Analyst Dan Ives wrote, "Over the past few years, as the AI revolution has arrived, the strong have become stronger in the giant technology world. Although the EU has been chasing giant technology companies for the past decade, the European Commission has only achieved small victories. But Wall Street's greater concern is that the U.S. Department of Justice has finally gained some traction in its power game with the giant technology companies. Last week's victory was a huge win for the Department of Justice, and now companies like Apple (AAPL.US), Amazon (AMZN.US), Meta (META.US), etc. will be in focus. We still believe that the separation of the business models of giant technology companies is highly unlikely to happen in the future, although the adjustment of business models and stricter scrutiny of mergers will be the first and core issues.
Wedbush believes that the DOJ's antitrust action may take "several quarters or even years" to produce a final result, and it expects Google's near-term business to be unaffected.
BMO analysts studied the 1998 Microsoft (MSFT.US) antitrust case, in which the software giant was accused of monopoly behavior, and the organization also pointed out that it took six years from the filing of the lawsuit to approval of a settlement. Analyst Brian Pitz said, "The outcome is uncertain, but we believe that both of these things happening at the same time may put pressure on Google's share price in the short term. We still believe that Google is a leader in the AI field in the medium to long term, although we are aware that there may be significant trial risks in the near term."
Although BMO has recently become more cautious about Google's stock, it still maintains an "outperform" rating.