Alphabet Under Scrutiny Over Anti-Competitive Behavior in Germany

Alphabet (GOOGL) and its subsidiary Google are subject to extended abuse control by the Bundeskartellamt, Germany’s competition regulator. In a press release, the agency says it concluded that the holding company and its subsidiaries meet the threshold to be subject to extended supervisory power. GOOGL shares fell 4.59% to close at $2,755 on January 6.

Alphabet is the holding company and operator of Google, which accounts for 99% of its revenue. The company makes most of its revenue from advertising. Alphabet’s earnings report for Q4 2021 is scheduled for February 02, 2022.

Anti-Competitive Behavior Crackdown

Consequently, the competition authority has already started looking at Google’s processing of personal data. The agency is also paying close watch to the Google News Showcase. The agency is also paying close attention to Amazon (AMZN), Apple (AAPL), and Facebook owner Meta (FB).

Even though Google remains under supervision by the competition authority, the tech giant’s spokesperson insists the company is compliant. He also insists they will continue to work with the Federal Cartel Office to ensure people and businesses continue using their products in a constructive way.

A new provision under the German Competition Act that came into effect last year requires the competition agency to act earlier and more effectively against large digital companies. The two-step approach requires the agency to act appropriately and prohibit companies wielding too much power and control from engaging in anti-competitive behavior.

Google is one of the companies targeted as it offers multiple internet services and controls a more than 80% market share of the search business.

Stock Rating

Last month, Societe Generale analyst Christophe Cherblanc reiterated a Buy rating on the stock and raised the price target to $3,730 from $3,260, implying 35.37% upside potential to current levels.

Consensus among analysts is a Strong Buy based on 26 Buys and 2 Holds. The average Alphabet price target of $3,368.75 implies 22.26% upside potential to current levels.

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