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The DOJ-Google Fight Comes Into Focus. Why It's Finally Hitting Alphabet's Stock. (Barrons)
Until Thursday, shares of Google-parent Alphabet had largely escaped regulatory worry. A new government filing has changed that.
Paywalled at Barrons, but archived: https://archive.is/Td3zH#selection-229.0-246.0
By Adam Levine
Nov. 21, 2024
The U.S. Department of Justice has aggressively pursued Google as a monopolist in recent years, going back to the first Trump administration. And it’s gotten a federal judge to rule in its favor.
But the DOJ’s full intentions weren’t fully clear until late last night when the department filed specific remedies that it would like to see the U.S. District judge impose. The DOJ is out for a pound of flesh. [1]
...
Here’s why investors are nervous:
An end to search payments: The payments that Google makes to be the default on mobile devices were at the heart of the DOJ’s case. Most prominent among these are Google’s payouts to Apple , which were pegged at $20 billion in 2022 during the trail. That number represented 16% of Google’s cost-of-revenue. But they’re also material to Apple, comprising 5% of its 2022 revenue. Assuming that stream of payments all falls to the bottom line, it would have been roughly 21% of Apple’s net income that year.
and more ... at the link
...
The wild card:
In the meantime, there is a new administration coming to the White House in January, and new appointees at the DOJ. Jonathan Kanter, the DOJ’s lead on its cases against Google, will likely be replaced. But it’s important to remember that this case originated in 2020 under the first Trump administration and it includes 49 states as co-plaintiffs. Most of these states have Republican Attorneys General.
But the DOJ’s full intentions weren’t fully clear until late last night when the department filed specific remedies that it would like to see the U.S. District judge impose. The DOJ is out for a pound of flesh. [1]
...
Here’s why investors are nervous:
An end to search payments: The payments that Google makes to be the default on mobile devices were at the heart of the DOJ’s case. Most prominent among these are Google’s payouts to Apple , which were pegged at $20 billion in 2022 during the trail. That number represented 16% of Google’s cost-of-revenue. But they’re also material to Apple, comprising 5% of its 2022 revenue. Assuming that stream of payments all falls to the bottom line, it would have been roughly 21% of Apple’s net income that year.
and more ... at the link
...
The wild card:
In the meantime, there is a new administration coming to the White House in January, and new appointees at the DOJ. Jonathan Kanter, the DOJ’s lead on its cases against Google, will likely be replaced. But it’s important to remember that this case originated in 2020 under the first Trump administration and it includes 49 states as co-plaintiffs. Most of these states have Republican Attorneys General.
So maybe Google pays 100 billion in laundered bitcoin to Comrade Caligula instead of the DOJ?
Stay tuned to the grift mill ...
[1] Yes, the DOJ has been mighty busy taking down Google, trying meaningless nobody's for Jan 6, protecting billionaires from bitcoin theft, and protecting Baby Shitler from hack attacks and assassination attempts by Iran's Revolutionary Guard. Too bad they let democracy circle the drain. They got priorities.
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