This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Google (NASDAQ:GOOGL) began to provide documents that were requested in a probe into its advertising processes brought forth by all State Attorneys General except those from Alabama and California. The company has been slow to release documents regarding the probe which has seen extended battles over documents requests. The Texas attorney general’s office reported that they had now received some data from the company but it is unclear if this was the information they were asking for since the office declined any further comment. The company finds itself locked into an ongoing battle as the documents requested are part of an antitrust and consumer protection inquiry that is now almost a decade old with Texas having first launched an inquiry in 2010 which didn’t go anywhere and was eventually closed only to be reopened multiple times over the intervening years.
This is not the only inquiry that Google is facing, another inquiry is also being run by the U.S. Justice Department and another is open in the House of Representatives Judiciary Committee. While California has failed to join the probe with the other states in a recent press conference Attorney General Xavier Becerra strongly implied that his office was aware of the investigation and that, “We’re fully aware of what’s going on in this digital economy and we are cognizant of the need to provide consumers with true protections,” Becerra said. “We will continue to do what we must to protect the people of our state and we will certainly act on any leads.” This does not bode well for the tech giant as California is the location of the company’s headquarters, allowing the state to have much more direct access and ability to investigate the company and its operations, in addition, to have significant resources that many of the smaller states in the probe do not have.
With so many different entities taking a particular interest in Google the company is likely to face consequences similar to the landmark antitrust case from the 90’s against Microsoft (NASDAQ:MSFT) where a judge ruled that the company would need to be broken up into two separate entities. Fortunately for Microsoft, the D.C. Circuit Court of Appeals overruled the judge on the case and he later recused himself after accusations of unethical behavior. Eventually, the entire ordeal ended in a settlement in which the company made minor concessions that had little to no effect on its business and was argued to have given Microsoft, "a special antitrust immunity to license Windows and other 'platform software' under contractual terms that destroy freedom of competition." Andrew Chin wrote at the time.
While history does not really repeat itself, it does tend to rhyme, and in this particular case, it is highly likely that Google will end up making minor concessions and possibly pay a fine at the most. In recent history, there has not been an instance of an appetite to break up large monopolies like there was in the past. The last monopoly to be broken up was back in the ’80s with the break-up of the old AT&T (NYSE:T) into the many “baby bells”. Obviously, this just leads to new companies and new rounds of mergers in the communications space.
