Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) is down about 3% on Wednesday following some negative news from Tuesday. At its low today, GOOGL stock was down more than 4% at one point in the session.
While the disappointing earnings results from various tech companies did not help mega-cap tech this morning, Alphabet had its own disappointing news. In an effort to break up Google’s online advertisements, the Justice Department (DOJ) — along with eight states, including California — filed an antitrust lawsuit against the company.
The Justice Department claims the company’s online ad tool “prevents competitors from entering the online advertising market and blocks publishers from monetizing their own content,” according to Yahoo! Finance.
Perhaps even more damning, the DOJ wrote:
“Through this monopolization lawsuit, the Justice Department and state Attorneys General seek to restore competition in these important markets and obtain equitable and monetary relief on behalf of the American public.”
When the Department of Justice starts throwing around the “M-word” — monopoly — investors tend to be concerned, and rightfully so. According to Assistant Attorney General Jonathan Kanter, “Today’s lawsuit seeks to hold Google to account for its longstanding monopolies in digital advertising technologies.”
What Does Nancy Pelosi Have to Do with GOOGL Stock?
U.S. House Rep. Nancy Pelosi is well-known for her trades in the stock market. There’s even a social media account that tracks her trades that has more than 280,000 followers.
Pelosi sold 30,000 shares of GOOGL stock from Dec. 20 to Dec. 28. Now, some would say she did so as part of a normal portfolio rebalance and shedding underperforming assets ahead of the end of the year. Keep in mind, GOOGL stock was near its 52-week low toward the end of the year. However, opponents would argue Pelosi had some sort of insight into the DOJ’s actions and she was reducing her risk by selling almost $3 million worth of Alphabet shares.
At the end of the day though, it doesn’t really matter. I mean, from a moral perspective, it certainly does if Pelosi was trading on non-public information. But from a stock-price perspective, there is little relevance to Pelosi’s actions. After all, shares are currently higher now than at any point during the selling window from Pelosi’s December sales.
While the headlines regarding the DOJ and monopolistic accusations are negative upon first glance, some investors argue GOOGL stock would be more valuable if it were forced to break up.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
