DA Davidson Analyzes Alphabet Antitrust Solutions: “Investors Prefer Major Breakup Over Separate Spin-offs”

Please note that this content does not constitute investment advice, and the author does not hold any positions in the stocks discussed.

Alphabet Faces Antitrust Challenges Amidst Breakup Demands

Alphabet Inc.(NASDAQ: GOOGL), the parent organization of Google, which operates the leading search engine alongside its extensive advertising technology, Chrome browser, and Android operating system, is currently dealing with rigorous antitrust implications. Recent court findings have determined that Alphabet has played a role in sustaining an illegal monopoly within the search engine market. As a result, an asset management firm is advocating for the restructuring of Alphabet to potentially achieve improved valuation multiples.

Court Rulings and Implications

In 2024, U. S.District Court Judge Amit Mehta ruled that Google, as part of Alphabet, violated antitrust regulations by enforcing an illegal monopoly in the search domain. This ruling has precipitated a remedy trial that wrapped up recently. Although Judge Mehta has yet to finalize a remedy, the U. S.Department of Justice (DOJ) has proposed a divestiture of the Chrome browser and its affiliated open-source project, Chromium.

Potential Buyers and Privacy Concerns

The DOJ has identified possible acquirers for Chrome, which include notable players such as Yahoo, OpenAI, and Perplexity. Conversely, Alphabet has maintained that divesting Chrome would endanger user privacy and security, highlighting that its proprietary technologies are intricately woven into the browser’s operational fabric.

A Waiting Game for Rulings

Judge Mehta is anticipated to issue a ruling by August 2025. Following this, it is expected that Alphabet will seek an appeal while also trying to secure an injunction against any implemented rulings.

Additional Antitrust Cases Surrounding Alphabet

In addition to the search-related case, Alphabet is involved in another remedy trial concerning its advertising technology, where it has also been found culpable of monopolistic practices. Moreover, the firm faces further antitrust scrutiny from the Epic vs. Google case, in which a federal jury concluded in December 2023 that Google held a monopoly over Android app distribution and in-app billing services.

DA DAVIDSON ON $GOOGL (NEUTRAL; PT $160): TIME TO BREAK IT UP AND UNLEASH SHAREHOLDER VALUE’

Analyst comments: “Investors want a big-bang breakup, not isolated spin-offs. We believe the company is headed toward an eventual passive-aggressive spin-off of Network and possibly…

— Wall St Engine (@wallstengine) May 12, 2025

Investors Calling for a Major Breakup

DA Davidson, holding 437, 910 shares of Alphabet, has issued a compelling statement advocating for a “big-bang breakup”of Alphabet’s Google-centered operations. They argue that investors are looking for substantial restructuring rather than piecemeal spin-offs:

“Investors want a big-bang breakup, not isolated spin-offs. We believe the company is headed toward an eventual passive-aggressive spin-off of Network and possibly Chrome/Android to appease the DOJ, likely only after a prolonged delay.”

Future Revenue Prospects for Alphabet

Despite the ongoing challenges, DA Davidson contends that Google’s search business will likely continue to demonstrate growth in revenue for several quarters, even if facing impairment. They suggest that Alphabet may only experience financial repercussions from Google Search after major shifts by Apple regarding default settings and the integration of ad features by ChatGPT. Thus, uncertainty looms over Alphabet’s valuation until these developments unfold.

The Market Response to Alphabet’s Situation

In light of recent trade agreements between the U. S.and China, Alphabet shares have increased by approximately 3% in pre-market trading today. Nonetheless, the stock has experienced a decline of about 20% so far this year, showcasing the volatility and challenges faced by investors in light of the antitrust developments.

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