To this proof of American economic leadership, the government’s response is more like: “Nice business you got there, a shame if something happened to it.” The Federal Trade Commission is seriously talking about breaking this company up.
The Cloud and the Services
What would such a breakup look like?
The most logical form, in the case of Google, would be to separate services from the cloud. Have YouTube, Google, and every other service rent cloud capacity and make it on their own. Maybe the enterprise-focused Google Cloud business might stay, but that would be it.
That wouldn’t be enough for some rivals. They claim every aggregation of Google search has an antitrust violation. “You do the work, and let us take the profit” is their attitude. But would these companies really stay in their lanes if Google didn’t exist?
The clouds of Google and the other Cloud Czars – Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Apple and Facebook (NASDAQ:FB) – were built on the cash flow of free or cheap services. Their investment, with no guarantee of profit, created $4.5 trillion of market cap.
Turning clouds into landlords would mean building tech with debt, as companies like Equinix (NASDAQ:EQIX) do. It would also mean throwing off all profits as dividends, which is the Real Estate Investment Trust (REIT) model. After watching AT&T (NYSE:T) take government subsidies for decades without investing in new technology, while Google exploded past it without one government dime, do we really want to go back to that 20th century business model?
Even the trade groups Google belongs to, like the Internet Association, are not rushing to its defense. That’s because the companies being crushed by Google’s expanding services, including Yelp (NASDAQ:YELP) and Trip Advisor (NASDAQ:TRIP), are also members of these groups.
Buy Alphabet Stock Now?
For people who focus on the numbers, like our Bret Kenwell, GOOGL stock is a screaming buy. Google is achieving all this growth while its cloud business still measures its market share in the single digits.
For those who follow politics, however, there are warning signs. The companies that should be Google’s friends aren’t stepping up in support. European regulators treat the Cloud Czars as ATMs. American regulators want government to take the internet’s power from the marketplace.
The Bottom Line on GOOGL Stock
The regulatory goals of the Cloud Czars are different from those of every other tech company. But each of the Czars works through these things on their own.
This keeps those who built the clouds from speaking with one voice in its defense. A smart Google lobbyist might point to how the company is using its cash to fight kidney disease, or how it has pioneered in car safety technology. They might point out that every company shocked by Google’s use of data is doing the same thing with it.
But if that is happening, I don’t see it. If the clouds won’t defend themselves, no one else will.
Dana Blankenhorn is a financial and technology journalist. He is the author of the environmental story, Bridget O’Flynn and the Bear , available at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AAPL, MSFT and AMZN.