Why fears of Google’s antitrust crackdown are terrorizing Wall Street

A growing number of Wall Street analysts have issued warnings of a possible breakup of Google as the Big Tech giant struggles to fend off a pair of major federal antitrust lawsuits that could destroy its business model.

The Justice Department is seeking a forced sale of Google’s digital advertising business in an antitrust case that began last week in federal court in Virginia. Separately, a federal judge will consider a possible split after ruling last month that Google operates an illegal monopoly over the Internet search market.

While the final outcome in both cases is likely years away, research notes compiled by the Wall Street Journal suggest some analysts expect a negative outcome for Google.

Bernstein analyst Mark Schmulik said it was “difficult to foresee Google escaping the struggles unscathed.” Evercore ISI’s Mark Mahaney said his firm is “more cautious on Google stock” because of what he described as a period of “significant uncertainty” in the near term.

The digital advertising case — in which the DOJ claims Google collects more than a third of every dollar spent on its ad platforms — will be a “tough test for Google to win,” according to a Sept. 9 note by Justin Patterson of KeyBanc Capital cited by the Journal.

Google could lose 1% to 2% of its projected earnings in 2025 if it is forced to sell its adtech businesses, Patterson estimates.

The Post has contacted Google for comment.

Google shares have fallen roughly 14% since the start of the company’s current fiscal quarter on July 1. By comparison, shares of Microsoft and Amazon — two other Big Tech firms facing antitrust scrutiny — have each fallen about 4% over the same period.

In the case of adtech, the DOJ is arguing that Google should, at the very least, be required to sell its Ad Manager marketplace.

The feds allege that Google operates a “trifecta of monopolies” in digital advertising by controlling Ad Manager, which connects advertisers with online publishers, as well as the products used on the buy and sell side of most advertising deals.

The court heard damning testimony last week, including details about an internal document in which a Google executive boasted in 2009 that the company’s goal was to “crush” digital advertising rivals.

In the Internet search case, Judge Amit Mehta said earlier this month that he plans to rule on Google’s sentence by August 2025.

DOJ lawyers are expected to push Mehta to order Google to sell the assets that fueled the search monopoly, such as its Android operating system or Chrome web browser.

Other options include blocking Google from paying billions to partner firms, such as Apple and AT&T, to ensure that its search engine is enabled by default on most smartphones.

Mehta determined that the payments were anticompetitive and stifled competition against Google’s search engine.