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Why These Companies Could Benefit From Google's Antitrust Lawsuit

Chris Katje
·3 min read

The antitrust lawsuit filed against Alphabet, Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) Tuesday by the Department of Justice alleges that Alphabet subsidiary Google uses anticompetitive practices to maintain a monopoly on the search and advertising market in the United States.

The lawsuit points out Google’s 80% market share in the U.S. search market. The Department of Justice also alleges Google locks out competitors through exclusionary agreements.

Tepper On Google's Antitrust Risk: “This has been a headline risk for years, and it really doesn’t change my outlook,” Mark Tepper, president of Strategic Wealth Partners, said on CNBC’s “Trading Nation.”

Google does have a monopoly on the search market, Tepper said, but questioned the effectiveness of breaking up the company. 

“Probably some more regulation, probably a fine, but what’s the government going to do? Are they going to take business from Google and then give it to an even larger giant like Microsoft?”

As investors wait to see if Alphabet's hand is forced, we look at some possible stocks that could win from a break-up scenario.

Apple Inc: Given its competition against Google in phone search, maps, and smart speakers, Apple Inc (NASDAQ: AAPL) could be a natural winner in a split of Alphabet assets.

Related Link: DoJ Officially Files Antitrust Lawsuit Against Google

TripAdvisor: The CEO of TripAdvisor Inc (NASDAQ: TRIP) hasn’t shied away from his belief that Google is hurting his company’s business with some unfair practices.

He recently told Bloomberg that Google Search makes the playing field uneven. Shares of TripAdvisor are down 35% in 2020 and have fallen more than 75% over the last five years.

Booking Holdings: The owner of online reservation and recommendation sites, Booking Holdings (NASDAQ: BKNG) could be a winner from Google having to change its search practices. Booking Holdings owns Booking.com, Kayak and Priceline.com The company relies on people finding its results through search.

Netflix: Alphabet is the owner of YouTube, which is one of the top streaming companies in the world.

Netflix Inc (NASDAQ: NFLX) is a rival, but could also help assign a valuation to YouTube if it was split off as a separate company. Investors and analysts could use a pure play company like YouTube as a comparison of what Netflix is worth.

Zillow: Online real estate company Zillow Group, Inc (NASDAQ: Z) is a company that gets traffic from Google search results. A change in Google’s practices could benefit a company like Zillow.

Garmin: GPS providers like Garmin (NASDAQ: GRMN) have seen the shift of drivers using their phone and apps like Google Maps as navigation devices.

Garmin is a company to watch if Google has to make changes to its Google Maps feature.

Yelp: One of the biggest cheers for the Department of Justice lawsuit came from Yelp Inc. (NYSE: YELP), a review platform that connects consumers with local businesses.

“By systematically reducing the quality of its search results in order to entrench and extend its search and search advertising monopolies, Google is directly harming consumers,” the company said in a blog post.

Yelp could benefit if Google has to change search practices and allow Yelp results to appear higher in consumers’ searches.

Photo courtesy of Zillow.

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