Did Alphabet Make Shady Deal With Apple?The Department of Justice alleges that Alphabet is engaged in illegal monopolistic practices.
Google parent Alphabet Inc. (GOOGL) reports Q3 2020 earnings after Thursday’s U.S. closing bell, with analysts expecting a profit of $11.14 per-share on $42.81 billion in revenue. That would mark a modest 10% earnings-per-share (EPS) increase compared to the same quarter in 2019. The stock fell after a mixed Q2 report in July but bottomed out quickly, ahead of a strong advance that posted an all-time high at 1726.10 in September.
Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Department Of Justice Files Anti-Trust Suit
The U.S. Department of Justice filed an anti-trust suit against Alphabet last week, alleging “Google has unlawfully maintained monopolies in search and search advertising by (1) entering into exclusivity agreements that forbid pre-installation of any competing search service and (2) entering into tying and other arrangements that force pre-installation of its search applications in prime locations on mobile devices and make them undeletable”.
DoJ intends to target a questionable deal with an alleged co-conspirator to prosecute their anti-trust case. According to The New York Times, the company pays Apple Inc. (AAPL) an estimated $8 to $12 billion per year to make Google the exclusive search engine for all their devices and services, including the iPhone and Siri. More importantly, this is alleged to be Alphabet’s biggest single payout, accounting for as much as 21% of Apple’s annual profits.
Wall Street And Technical Outlook
Wall Street consensus is utterly euphoric, with a ‘Strong Buy’ rating based upon 31 ’Buy’ and 1 ‘Hold’ recommendation. No analysts are recommending that shareholders close positions and move to the sidelines. Price targets currently range from a low of $1,600 to a Street-high $2,202 while the stock opened Monday’s U.S. session just $15 above the low target. This suggests Alphabet is undervalued but the lawsuit could weigh on buying pressure in coming months.
The stock reversed in September at a rising highs trendline going back to 2015 and sold off to the 200-day moving average. It bounced off that support level into October and has now recovered about 75% of the downdraft. Accumulation readings are perking up after garden variety profit-taking and a strong quarterly report could close the distance into the prior high. Even so, it will be tough to overcome trendline resistance between now and year’s end.
For a look at all of today’s economic events, check out our economic calendar.