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The US antitrust lawsuit against Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) is starting to arrive at Barclays.
“We have followed the Justice Department’s lawsuit closely over the past few weeks and are increasingly concerned about the strength of the case against Google,” said analysts led by Ross Sandler wrote in a note.
While Google (GOOG) (GOOGL) and Apple (AAPL) argued that the latter chose Google as its default search engine because it is the best, an internal study by Alphabet (GOOG) (GOOGL) showed that 54% of users of iOS in the US They have no idea who their search engine provider is, the investment firm’s analysts explained.
And although Google (GOOG) (GOOGL) said it’s easy to switch to another search engine, Google’s internal data showed that 75% of users don’t switch.
Last month, a Justice Department expert in the case said the default power is “very significant.”
“When you see Google paying billions and billions, there has to be a reason,” Massachusetts Institute of technology professor and economist Michael Whinston said during his testimony. “That’s the first thing that, as an economist, slaps me in the face.”
The Department of Justice is suing Google (GOOG) (GOOGL) over its agreements with device makers and wireless service providers to be the default search engine on devices. The government says such agreements are illegal and illegally help the company maintain its dominance in the online search market.
There is evidence there
One of the government’s strongest pieces of evidence is a letter sent by a former Google (GOOG) (GOOGL) general counsel to Microsoft (MSFT) in 2005 saying that the act of making MSN search the default option in Internet Explorer It was a “possible antitrust violation.” rape.”
That is “pretty much the same argument that the Justice Department is making today,” Barclays added.
Despite its concerns, the investment bank said it still forecasts $120 billion in iOS search revenue in 2024 for Google.
“What is not yet clear is, if there is an adverse ruling, what kind of changes to the structure of the search market the judge believes could resolve the monopoly problem,” the bank said.
Device makers may end up having to implement a choice screen for search providers, but Barclays noted that choice screens have not done much to change the dynamics of market share in Europe. While that route is obviously consumer-friendly, it does little to change the industry.
“It seems increasingly likely to us that if the Justice Department wins, election filters could be implemented, which in our view would be a welcome positive development for GOOG shareholders,” the bank said.
Alphabet (GOOG) (GOOGL) Stock Rises 0.9% Wednesday morning.
