The nightmare doesn’t seem to end for Alphabet Inc. GOOGL as it is likely to face a third set of formal antitrust charges from Europe’s competition regulator, the European Union (EU).
According to a Wall Street Journal (WSJ) report on Monday, EU is gearing up to file fresh antitrust charges against the search giant over its dominance in advertising that is said to be violating competition rules.
EU is said to be preparing a formal Statement of Objections. For this, it is reportedly seeking statements from the companies who had filed complaints against Google to publish some of their confidential information. There were complaints that Google was using its web search monopoly unlawfully to hurt its competitors.
What Is the Investigation All About?
EU is indeed investigating whether Google is misusing its search advertisement platform to prevent its search competitors from placing advertisements on their own websites.
According to the WSJ report, EU is also investigating whether the company is trying to obstruct advertisers under Google’s fold from switching to other search advertising platforms.
If Google is found to have broken the rules, it might have to pay penalties of up to 10% of its worldwide revenues, which was $74.5 billion in 2015.
Series of Allegations
Google is already being investigated in the EU over allegations that it’s misusing its search results to benefit its own shopping service.
In April, EU initiated investigations over the company’s exclusive deals with smartphone makers and telecom operators that are likely violating competition rules.
In the same month, News Corp. NWSA filed a formal complaint against Google with the European Union, alleging that the amount of content Google was displaying in its search results was deterring people from clicking on the publisher’s site. As a result, publishers are losing ad revenues.
Our Take
Google is embroiled in legal troubles across practically all continents. Apart from being a huge drain on resources, these troubles have earned it a bad name on privacy concerns, anti-competitive concerns, patent infringements and what have you. Though the company so far has had extraordinary success in the courtroom and with government officials around the world, its streak of “good luck” can change at any time, so investors remain wary.
At present, Google has a Zacks Rank #4 (Sell). Some better-ranked stocks worth considering are Blue Calypso, Inc. BCYP, Internap Corp. INAP and Yirendai Ltd. YRD, each sporting a Zacks Rank #2 (Buy).
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