Alphabet Inc.’s (GOOGL) Google is facing a new antitrust investigation that has been launched by the State of California.
In a report by Politico on July 9, California’s Attorney General Xavier Becerra decided to pursue an investigation after repeatedly choosing not to pursue the tech giant after being pressed to do so in light of other state investigations into Google that were launched last year.
California Attorney General’s Office Spokesperson Sarah Lovenheim said to Gizmodo, on July 10, “To protect the integrity of our work, it’s our practice not to comment on any pending or potential investigation, even to confirm or deny their existence.” Google also would not comment on the investigation.
California’s choice to withhold investigations on Google is noteworthy because the state is known for having a large staff of antitrust investigators and by comparison to other states, Google is in relatively close proximity with its headquarters in Mountain View, California.
In September of last year, attorney generals from 50 states and territories announced they were all launching antitrust investigations into Google. At a press conference before the U.S. Supreme Court, Republican Attorney General Ken Paxton from Texas said that Google “dominates all aspects of advertising on the internet and searching on the internet.”
Following the announcement, Open Markets Institute said September 9, 2019, “We applaud the 50 state attorney generals for taking this unprecedented stand against Big Tech by uniting to investigate Google’s destruction of competition in search and advertising.”
The Federal Trade Commission (FTC), on February 1, also ordered Google, Amazon (AMZN), Apple (AAPL), Facebook (FB), and Microsoft to turn over “information and documents on the terms, scope, structure, and purpose of small and unreported transactions made between January 1st, 2010, and December 31st, 2019.” The FTC intends to focus on acquisitions from each of the companies.
As the investigations have mounted, the House Judiciary has also called on the CEOs of these tech giants to provide testimony in connection with its own antitrust inquiry. Google CEO Sundar Pichai is expected to provide his statement before the subcommittee later this month.
Analysts are staying bullish despite the antitrust concerns. Mizuho Securities analyst James Lee reiterated a Buy rating on Alphabet Inc.’s stock on July 13 citing Google Cloud’s platform as being an attractive option for retailers because Amazon’s large online retail reach represents their primary competition. The analyst raised his price target from $1,560 to $1,650 which implies 6% upside potential.
Also, on July 9, Morgan Stanley analyst Brian Nowak maintained a Buy rating on GOOGL and a price target of $1,700 (implying 10% upside potential).
Google’s stock is up 15% year-to-date with a Strong Buy analyst consensus that breaks down into 28 Buy ratings versus 1 Hold rating. The $1,554 average price target is flat with the current share price. (See Google’s stock analysis on TipRanks).