US antitrust ruling 'major plus' for Google, Apple to benefit: SA analysts

[Apple logo and Google Pixel. Two biggest american company in modern technology.]
Vadym Plysiuk

Seeking Alpha analysts said a federal judge's ruling in an antitrust case brought by the U.S. Department of Justice was a "major plus" for Alphabet (NASDAQ:GOOG [https://seekingalpha.com/symbol/GOOG]) (NASDAQ:GOOGL [https://seekingalpha.com/symbol/GOOGL]) and a "big win" for Apple (NASDAQ:AAPL [https://seekingalpha.com/symbol/AAPL]).

Shares of Google surged about 6%, while Apple's stock rose around 4% premarket on Wednesday.

On Tuesday, Judge Amit Mehta ruled [https://seekingalpha.com/news/4491426-google-not-required-to-sell-chrome-in-antitrust-remedy-ruling-shares-jump] that Google must open up competition in online search by sharing more data with competitors and added that the company could not enter exclusive contracts for search but could still pay for search engine inclusion.

"The U.S. District Judge Amit Mehta's recent ruling is nothing but a big win for Apple. Since the $20B deal it has with Google survives, the company has preserved a substantial part of its services' revenue, whose margins reportedly hover above 70%," said Seeking Alpha analyst Luca Socci [https://seekingalpha.com/author/luca-socci].

Socci noted that Google is barred from signing exclusive agreements, but it can sign annual deals. "This opens the space for other competitors to outbid Google each year and Apple will nothing but benefit from this situation."

The analyst added that Apple won't be required to introduce search choice screens, which means the User Interface, or UI, experience remains unchanged. "This is why I expect renewed enthusiasm for a few days for a stock that has puzzled investors regarding AI," Socci noted.

Seeking Alpha analyst YR Research [https://seekingalpha.com/author/yr-research] said that coming into the ruling, investors were not overly concerned for Apple to begin with, while Alphabet’s worst-case scenarios had significant downside.

Though Judge’s remedies ended up about in line with the market’s consensus assumption, the added certainty justifies a rise in stock prices for both, YR Research noted.

"Fundamentally, Apple likely ends up unharmed, as any loss of ‘exclusivity’ payments from Google is likely to be offset by the option to add other high-paying rivals. From Google’s side, any market share loss will likely be offset by lower payments to Apple," said YR Research.

Meanwhile, Jonathan Weber [https://seekingalpha.com/author/jonathan-weber], Investing Group Leader for Cash Flow Club, said that investor sentiment is expected to improve following the ruling.

"The antitrust ruling is a major plus for Alphabet as it derisks the investment thesis for this tech giant and gets rid of one of the bearish talking points. Investor enthusiasm should improve following this news," said Weber.

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