Alphabet Shares Dip 5% As Justice Department Pushes Chrome Sale

Topline

Google parent Alphabet’s shares fell more than 5% on Thursday, pacing for what would be the stock’s largest selloff in 10 months after the Justice Department requested Google to divest its Chrome browser to “permanently stop” the company’s monopoly over the search engine market.

Key Facts

Shares of Alphabet dropped to just over $166 as of around 2:40 p.m. EST, the furthest plunge for the stock since a decrease of 7% on Jan. 30, when Alphabet’s fourth-quarter earnings indicated ad sales that were below analyst projections.

The Justice Department asked Judge Amit Mehta—who ruled in August Google violated antitrust laws—to order Google to sell its Chrome browser, saying the move would allow rival search engines to access the browser.

Federal officials also sought to prevent Google from reentering the browser market for five years after the sale and from entering agreements with Apple or Samsung to have Google’s search engine the default on their devices.

The DOJ’s proposal represents the “worst possible remedies” for Google’s antitrust case, and expanding the search and search ads market for Google’s competitors “could threaten” the company’s competitive advantage, JPMorgan said in a note Thursday.

What To Watch For

The DOJ fell short of asking Google to divest from Android, though the agency called for changes to Android’s operating system that would prohibit its devices from favoring Google’s search engine and ad provider. If these changes aren’t enacted properly, the DOJ said Mehta should require Google to sell Android.

Chief Critic

Google condemned the DOJ for pursuing what it called a “radical interventionist agenda” that the company said would “harm Americans and America’s global technology leadership.” The DOJ’s proposal would also endanger the “security and privacy of millions of Americans,” Kent Walker, Google’s chief legal officer, wrote in a blog post.

Key Background

Mehta ruled in August that Google is a “monopolist” and acted to maintain a monopoly with its search engine. The DOJ and attorneys general from 11 states opened an antitrust case against Google in October 2020 claiming the company had implemented “anticompetitive and exclusionary practices” to maintain a search engine monopoly, saying Google was used for nearly 90% of Americans’ online search queries. Mehta is expected to hear arguments from both the DOJ and Google on how to address the claims, and Google is required to respond to the DOJ’s proposal by Dec. 20.

Further Reading