Alphabet’s Google Ads Business Under EU Antitrust Scrutiny

The European Commission has opened an antitrust probe into Google’s advertising business. Google is a unit of the Alphabet (GOOGL) conglomerate. The probe will seek to find out whether Google has breached EU competition rules.

A major focus of the investigation will be on Google’s practices in the advertising technology supply chain. The probe will assess whether the company distorts competition by restricting the ability of rivals to access user data that the company itself uses in its own products. Additionally, the probe will look into potential restrictions Google has placed on rivals trying to serve ads on YouTube. (See Alphabet stock chart on TipRanks).

“Google is present at almost all levels of the supply chain for online display advertising. We are concerned that Google has made it harder for rival online advertising services to compete in the so-called ad tech stack,” said Margrethe Vestager, the executive vice-president overseeing competition policy at the European Commission.

The Commission notes that many publishers depend on online ads to fund the free content they offer consumers. Therefore, it says fair competition is important. The authority did not say how long it would take to complete the Google probe. Instead, it said factors such as the complexity of the case, and the extent to which the companies being investigated cooperate, will determine the duration of an antitrust probe.

Monness analyst Brian White reiterated a Buy rating with a price target of $3,000 on Alphabet stock. The analyst’s price target suggests 22.62% upside potential.

“Alphabet remains the highest-value target of a growing bipartisan effort to reign in Big Tech. Despite these headwinds, we believe Alphabet is well positioned for a continued recovery in digital ad spending this year,” noted White.

Consensus among analysts is a Strong Buy based on 28 Buys and 2 Holds. The average Alphabet analyst price target of $2,785.97 implies 13.87% upside potential to current levels.

GOOGL scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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