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Alphabet (NASDAQ: GOOGL), the parent entity of the Google search engine and its sprawling ad-tech business, the Chrome browser, and the Android OS, is facing stiff antitrust remedies now that it has been found complicit in maintaining an illegal monopoly in the search engine sphere. However, one asset management company now wants Alphabet's conglomerate structure dismantled to unlock higher valuation multiples.
For the benefit of those who might not be aware, US District Court Judge Amit Mehta ruled back in 2024 that Alphabet's Google violated antitrust laws by maintaining an illegal monopoly in the search sphere. This then spawned a remedy trial that concluded last week. While a terminal remedy is yet to be decided by Judge Mehta, the US Department of Justice (DOJ) wants Alphabet to divest the Chrome browser and its accompanying open-source Chromium project.
While the DOJ has already lined up potential Chrome buyers, including Yahoo, OpenAI, and Perplexity, Alphabet has continued to insist that a divestiture of Chrome would compromise user privacy and security, especially as Google's proprietary technology remains deeply embedded within the browser.
Judge Mehta is expected to deliver a ruling by August 2025. Thereafter, Alphabet is widely expected to appeal the decision while simultaneously pushing for an injunction against its implementation.
Separately, Alphabet also faces a remedy trial in Google's ad tech case, where again the search giant was found liable for maintaining an illegal monopoly.
Finally, Alphabet faces antitrust repercussions in Epic vs. Google case, where a federal jury concluded in December 2023 that Google maintained a monopoly on 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
This brings us to the crux of the matter. DA Davidson, which owns 437,910 Alphabet shares, has penned an interesting note today, openly calling for a "big-bang breakup" of Alphabet and its Google-led business units:
"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."
Given the lack of alternatives to Google Search at present, DA Davidson believes Google's search business can continue to show top-line growth for "several quarters" even after it is impaired. This means that Alphabet will only begin to see a revenue impact on Google Search "after Apple changes its default settings and ChatGPT introduces ads," leading to a persistent uncertainty-driven overhang for now.
To hammer its point home, DA Davidson argues that Alphabet is currently placing a valuation ceiling by "limiting all its businesses to the 16x Search multiple, rather than allowing them to trade at higher multiples like those of Netflix, Azure, The Trade Desk, or Tesla."
Alphabet shares are up ~3 percent in pre-market trading today, driven by the broader risk-on tone after the US and China agreed to a 90-day trade war truce over the weekend. So far this year, the stock is down around 20 percent.
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