Markets

European Regulators to Call for Google Breakup - Analyst Blog

The European Parliament is considering a non-binding resolution that suggests separating Google Inc.'s ( GOOGL ) search engine operations in Europe from the rest of its business as a possible way to curb its supremacy in the search space.

While the Parliament does not have any authority to initiate legislation and lacks the power to split corporations, and though the draft motion is a non-binding resolution, it would escalate the pressure on the European Commission to act against Google.

European politicians' concerns about Google's and other American companies' domination of the Internet business has grown considerably. These politicians have consistently sought ways to rein in their command in this space. A public call for a split would pose a considerable threat to Google's business.

The draft motion does not specify Google or any particular search engine, though Google is by far the foremost provider of such services in Europe with approximately 90% market share.

Google already faces severe disapproval in Europe about everything from confidentiality to tax policies, and has been dueling with a European court's verdict that it needs to eliminate links from search results that individuals find offensive.

Margrethe Vestager, the European Competition Commissioner who succeeded Joaquin Almunia, said that before taking any action she would consider the views of the parties concerned and watch over the latest industry developments.

Joaquín Almunia, repetitively tried to reach a settlement with Google. But none of those deals contented Googles rivals and critics.

Antipathy against Google, however, is not new in Europe.

The exposure of U.S. surveillance practices, including the fact that Washington scrutinized German Chancellor Angela Merkel's phone, ignited strong criticism, predominantly in Germany.

Google up til now has shunned the formal charges in the antitrust case, which began four years ago, and focused on its search and advertising business.

If a settlement is not reached and if in due course Google is found to have breached European Union competition law, it could face a massive fine of nearly $6 billion and have limitations imposed on its freedom to do business in Europe.

Google has also been charged with a separate antitrust investigation into its Android operating system for mobile devices. But that case is at a preliminary stage.

Officials at the European Commission could not be reached for comment while Google declined to comment.

Other Stocks That Warrant a Look

Google currently has a Zacks Rank #4 (Sell). Better-ranked stocks in this industry include Mercadolibre, Inc. ( MELI ), World Energy Solutions, Inc. ( XWES ) and Baidu Inc. ( BIDU ). All of them carry a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

GOOGLE INC-CL A (GOOGL): Free Stock Analysis Report

BAIDU INC (BIDU): Free Stock Analysis Report

MERCADOLIBRE IN (MELI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

BIDU GOOGL MELI

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More