Please ensure Javascript is enabled for purposes of website accessibility

Why Alphabet Stock Is Under Attack

By Rich Smith - Jan 27, 2021 at 11:22AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Europe puts Google in the crosshairs over competition and data collection concerns.

What happened

Shares of internet search giant Alphabet (GOOG -2.87%) (GOOGL -3.10%) fell 5% in early trading on the Nasdaq Wednesday, probably because of press reports of new governmental action against the tech giant in Europe that emerged midday Tuesday.

As of 10:50 a.m. EST, shares of the Google parent company remain down 2.9%.

Scales of justice with EU and French flags in the background

Image source: Getty Images.

So what

As Business Insider reported early in the day, the European Commission has asked "a host" of advertising firms to comment on Google's practices in Europe, specifically, how Google runs its digital advertising service and how it gathers data on consumers. The EC is said to be collecting information that it might later use within the context of a proposed Digital Markets Act to sue Alphabet to restructure its business.  

Later in the day, Bloomberg followed up with a story on how one of Europe's most influential leaders, French President Emmanuel Macron, is warning U.S. tech giants to refrain from any "unfair practices."  

Now what

It's not just Europe that's concerned about Alphabet's market power. Last week we discussed antimonopoly concerns raised by multiple U.S. states as well, but European leaders are deploying language that's actually quite inflammatory, with EC President Ursula von der Leyen decrying the "immense power of the big digital companies" and Macron describing unfair competition as an attack on European democracy.

The heightened temperature of the debate elevates the risk that, under a proposed Digital Services Act (a new law proposed in tandem with the Digital Markets Act), for example, Google might face fines of as much as 6% of global revenue if it fails to remove "illegal content," reports Bloomberg. If Google is found to be favoring its own products over those of competing companies, the fines could reach into the billions of dollars -- with the added risk that competition authorities might seek to "break up" Alphabet.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Alphabet Inc. Stock Quote
Alphabet Inc.
GOOG
$2,266.97 (-2.87%) $-67.06
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,257.16 (-3.10%) $-72.30

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
349%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.