Among the big tech stocks in focus today, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is generating most of the buzz on Wall Street. Shares of GOOGL stock are down around 1% in afternoon trading. This comes investors digest the first day of a key trial involving the company and the U.S. Department of Justice (DOJ).
Lawyers from the Justice Department and Alphabet commenced their opening statements in court today as part of one of the highest-profile anti-competition lawsuits from the DOJ in years. Government lawyers are attempting to successfully argue that Google search effectively has a monopoly in its space — and that Alphabet has used this power to stifle innovation and shut out competition.
Alphabet’s lawyers have argued that its Google search engine has provided users with decades of high-quality and free search. Thus, they question of whether consumer harm (higher prices) can be proved. The lawyers also add that, while Google may be the default search engine on many devices, it’s not the only option.
This legal battle will likely be both heated and lengthy. Let’s dive into a few things investors may want to keep on their radar.
GOOGL Stock Sinks on First Day of Key Antitrust Trial
- Lawyers from the DOJ appear to be intent on making an argument that Google’s monopoly depends on defaults. Investors will want to consider potential implications of a future settlement between the two parties. They should also consider whether Alphabet would agree to opening up its contract language with device makers.
- Whether or not antitrust lines were crossed appears to be a key sticking point. Justice Department lawyers are making the case that it’s clear that anti-competitive behavior has taken place. Meanwhile, Alphabet lawyers say that’s impossible if consumers haven’t been harmed.
- This entire lawsuit appears to be tied to a 133-year old law, which seems to carry a monetary damages limit of $100 million if monopolistic behavior can be proven.
- Previous high-profile antitrust lawsuits — like the DOJ’s lawsuit against Microsoft (NASDAQ:MSFT) in the early 2000s — have ended in settlement. Investors will be watching to determine what a settlement might look like in this case and how it could impact Alphabet’s business model moving forward.
- There’s also the possibility that Alphabet may win the lawsuit outright. In that case, a new precedent could be set for the entire tech sector. That makes the lawsuit among the highest-profile in history for tech companies.
On the date of publication, Chris MacDonald did not hold (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.
