24/7 Wall St. Insights
- The U.S. Department of Justice is pushing for a breakup of Alphabet Inc. (NASDAQ: GOOGL | GOOGL Price Prediction).
- The plan may focus on its Android, Google, and Chrome businesses.
- Also: Discover the Next Nvidia.
The U.S. Department of Justice believes that some of Alphabet Inc.’s (NASDAQ: GOOGL) divisions have created monopolies, and its proposal to a federal judge could eventually break apart the company. However, the case is far from over. The Justice Department’s last success in a similar case was when it forced AT&T to break into regional companies in 1982.
The plan may include splitting apart the two businesses with high market share in their categories. Most research ranks its Google U.S. search engine share at 90%. YouTube, its other ad-based business, is by far the largest video portal in the country. It has 97% of the online video player market. Together, they are online advertising juggernauts.
The other business Alphabet partially dominates is mobile operating systems. Android has a share of about 42%. Apple’s iOS is about 57%. The case goes beyond the market share metric. The Justice Department argues that Android is how Alphabet drives its mobile market share for search, Gmail, Maps, and other products. Each of these is installed as part of the Android OS.
The browser is the last part of Alphabet’s dominance. Chrome has a significant market share in this segment, and most research puts it at over 50%.
The case could take years to resolve, and there is no reason to believe the Justice Department has a huge edge. Bloomberg reports that Alphabet has called the charges “radical” and not in the best interest of customers and businesses. In the meantime, Alphabet is among America’s most profitable companies.
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