昨日，高盛分析师埃里克·谢里登（Eric Sheridan）和亚历克斯·维利亚特（Alex Vegliante）在向客户发布的报告中，将司法部可能采取的措施分为三大类：Goldman Sachs stated that the Department of Justice may require Google to divest the Android operating system, restricting Google from bundling its own services on Android devices, which will pose a significant obstacle to Google's search business revenue, as it not only restricts search query volume, but also limits Google's access to cross-service first-party data through unified user logins.
After such a long time, how will the usa Department of Justice ultimately sanction google?
The google monopoly case has been in progress for four years. With Trump's election as president and the imminent reappointment of a new leadership for the Department of Justice, this significant case is entering a critical stage.
Yesterday, goldman sachs analysts Eric Sheridan and Alex Vegliante categorized the measures that the Department of Justice might take into three main types in the report released to clients:
Restrict google from being the default search engine for third-party devices;
Require google to divest the android operating system and limit google from bundling its own services on android devices;
Require google to implement multiple data licensing and information sharing agreements.
Despite the threat of divestiture, goldman sachs remains bullish on google in the medium to long term, the analysts stated:
We believe that Alphabet's current valuation has priced in significant negative factors, but we recognize that due to the uncertainty of the antitrust case, the valuation multiple investors are willing to pay may continue to be suppressed.
Other Wall Street institutions are also bullish on Google, with jpmorgan and Stifel maintaining their shareholding ratings and target prices of $212 per share and $200 per share, respectively. Baird and evercore ISI believe that Google can outperform large cap, with target prices both set at $205 per share.
Yesterday, Google's Class C shares fell over 4%, currently reported at $169.24 per share.
1. Limiting Google from being the default search engine on third-party devices has a limited impact on Google's market share.
The default search engine agreements that Google signs with third-party original equipment manufacturers (OEMs) and distributors, such as apple, are one of the key points of this antitrust case. Goldman Sachs stated that the court may rule that Google cannot pay third parties to obtain the default search engine position, which could lead to various situations:
Another search engine paying fees to device manufacturers to become the default search engine on third-party devices;
Third-party OEMs and distributors voluntarily implement a 'choice screen' on their devices, allowing consumers to choose the default service from a range of potential services, especially the default search engine.
Google must implement a 'choice screen' on Android devices.
However, goldman sachs believes that the introduction of a 'choice screen' may have a limited impact on Google's market share, as consumers may still prefer to choose Google search.
2. Requiring Google to divest the Android operating system and restrict Google from bundling its own services on Android devices may pose significant resistance to Google's search business revenue.
The usa Department of Justice submitted to the court that, in addition to requiring Google to divest the Chrome browser, Google must also divest the Android operating system. More importantly, Google shall not re-enter the browser market within five years after divesting Chrome, which limits Google’s investment, acquisition, or cooperation with competitive search engines or ai search products.
Goldman sachs stated that if Chrome were indeed divested, it would pose significant resistance to Google's search business revenue, as it not only limits the volume of search queries but also restricts Google's access to first-party data across services through unified user login.
Furthermore, the court may require Google not to bundle its own services, such as Play and Chrome, on Android, meaning Google cannot pre-install its own applications or services on Android devices and set Google search as the default search engine.
As mentioned above, if the court chooses to take this measure, it may require Google to introduce a 'choice screen', but goldman sachs believes this will not significantly affect Google's search market share on Android devices. The EU's 2018 antitrust case against Google showed that the introduction of a 'choice screen' only caused Google to lose a minimal market share.
3. Requiring Google to implement multiple data licensing and information sharing agreements may lower the entry barrier for search engines.
The USA Department of Justice may require Google to implement multiple data licensing and information sharing agreements, which would benefit competitors of the search engine, third-party publishers, search advertisers, and others.
Firstly, the Department of Justice may require Google to open its index and models used for search, and provide user and advertisement search data (up to 10 years), share advertisement data (up to 1 year), search results, ranking signals, and more.
It is worth noting that Google has already signed agreements with some third-party search engines, which can use Google’s search results to generate their own result pages, but the usage is restricted, for example, Google prohibits these search results from being used on mobile devices.
Goldman Sachs expects that these measures may lower the entry barriers for search engines because other companies can quickly start by utilizing Google’s index, models, or search results. However, even if the entry barriers may be lower, building a successful and scalable search engine involves many other key factors, such as the ability to effectively organize underlying data and develop user-friendly products based on the index, matching user query volume and advertising budget scale, among others, which are not necessarily guaranteed.
Editor/ping
