Why Alphabet Stock Was Sliding Today

Shares of Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) were pulling back today after the U.S. Justice Department (DOJ) asked a judge overseeing an antitrust case against the Google parent to order Alphabet to sell its popular Chrome web browser.

The news was the latest sign of regulatory aggression toward Alphabet, and the stock was down 4.6% as of 9:56 a.m. ET.

Image source: Getty Images.

Is Alphabet an illegal monopoly?

Alphabet has been no stranger to regulatory pressure, as the DOJ also recently said that Google's payments to Apple to be the default search engine run afoul of antitrust rules.

The DOJ additionally argued that Google's ownership of Android gave it an unfair advantage and summarized its case, saying, "The playing field is not level because of Google's conduct, and Google's quality reflects the ill-gotten gains of an advantage illegally acquired."

Alphabet pushed back on the DOJ's argument, saying its demands would "hurt consumers and America's global technological leadership."

Chrome isn't a direct revenue driver for Alphabet, but it helps the company bring users into its ecosystem, where it can drive ad revenue, collect their data, and form partnerships that help monetize the platform. Still, losing Chrome would likely be a significant setback to Alphabet's business and Google's image, not to mention the Justice Department's other charges against the company.

What's next for Alphabet?

The Trump administration is set to take over the DOJ in two months, so the future of the case against Google is unclear.

The president-elect has enjoyed backing from a number of Silicon Valley bigwigs and venture capitalists, and Wall Street also cheered the election result, believing that it would bring less regulation. A number of financiers believe the Biden administration has overstepped its mandate in antitrust regulation and in blocking mergers and acquisitions.

Still, investors clearly see the DOJ case as a risk to the stock, and a judgment in favor of the DOJ would damage Google. The federal court overseeing the case has scheduled a two-week hearing in April 2025 to determine what changes the company must make so that it is no longer an illegal monopoly, and the case is expected to be resolved sometime next year.

Investors should expect the news to continue to move the stock, and be on the lookout for further updates on the case.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.