Investing in Alphabet Stock (GOOGL)

Alphabet Inc. was originally founded as a search engine company in 1998 under the name Google Inc. Since then, Google has become the world’s most popular search engine, with an 87% share of the global search market. The company has diversified far beyond search engines in the past two decades. It reorganized in 2015 and created the holding company Alphabet Inc. The parent holds Google, its largest subsidiary, and a number of other companies. Alphabet is listed on the Nasdaq exchange under the ticker symbols, GOOGL (Class A) and GOOG (Class C).

Alphabet earns revenue through the Google Search engine, YouTube, Google Play, Google Cloud, Chrome browser, and Android mobile operating system. In addition, the company has made considerable investments in the Stadia cloud gaming system, Waymo self-driving vehicles, and other technology initiatives.

Alphabet competes with companies that provide online platforms for connecting people with information and relevant advertising, digital content and application platforms, enterprise cloud services, and more. Major competitors include Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT), Apple Inc. (AAPL), Facebook Inc. (FB), Alibaba Group Holdings Ltd. (BABA), and others.

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Alphabet’s Latest Developments

• On June 29, 2021, Bloomberg reported that Microsoft and Google ended an agreement to negotiate disagreements between themselves via a number of dispute mechanisms before they brought disputes to regulators and courts. The agreement, originally struck in 2015, also agreed the two would not target the efforts of their respective lobbyists at each other. A major factor is Microsoft’s allegation that Google’s search-engine ad-management platform Search Ads 360, wasn’t adding new features to place ads on Bing, Microsoft’s search engine, as it was for Google, giving google an unfair competitive advantage.
• On June 24, 2021, the House Judiciary Committee approved six antitrust bills which could have a major impact on Alphabet, as well as other major tech companies such as Amazon, Microsoft, and Apple. From here the measures will go to the House floor for debate. The measures are the:

1. American Choice and Innovation Online Act: This law would ban tech firms from advantaging their own products and services on their platforms. For example, Apple couldn’t promote its own apps over others in its App Store.
2. Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act: The ACCESS Act would force big tech companies to let users easily move their data between platforms.
3. Ending Platform Monopolies Act: This bill would ban big tech firms from owning or operating businesses that would create conflicts of interest. For example, Google might be forced to sell Youtube since it is incentivized to favor YouTube in its search results over other video services.
4. Merger Filing Fee Modernization Act: This bill would raise merger fees for large mergers.
5. Platform Competition and Opportunity Act: This bill would force big tech companies to prove acquisitions were not monopolistic, shifting the burden of proof to them from the FTC.
6. State Antitrust Enforcement Venue Act: Which would make it harder for defendants in antitrust cases brought by states to move the case to other jurisdictions.

• On June 15, 2021, the Competition and Markets Authority, the U.K. antitrust regulator, announced that it was looking into the iOS and Android “mobile ecosystems” to see whether there is evidence they present an antitrust concern.
• On June 8, 2021, Dave Yost, the attorney general for the state of Ohio sued Google to have it regulated as a public utility. As a common carrier utility it would be forced not to give preferential treatment to its own products and services on its platform.
• On May 26, 2021, Google struck a deal with hospital operator HCA Healthcare that will allow Google to use data from HCA’s 2,000 hospitals to develop healthcare algorithms. HCA says that Google won’t be able to see identifying information from patient records. However, the companies have not disclosed the terms of the deal.
• On May 18, 2021, Google began it’s “Google I/O” (Input/Output) developer conference, which will continue through May 20. So far it has revealed the Android 12 design interface, a demo of “Project Starline,” which creates real-time 3D videoconferencing, and “smart canvas” initiative, which it says will help better integrate its Workplace apps.
• Also on May 13, 2021, Google announced that its Google Cloud business would be the one to supply computing services to SpaceX. This comes as SpaceX works to become an Internet service provider via its Starlink network of satellites.
• On May 13, 2021, Alphabet subsidiary Google was fined $123 million by Italian antitrust authorities. The fine was levied because Google did not allow the charging-station locator app JuicePass on its Android Auto platform. JuicePass is made by Enel, a government-owned utility. The regulator said that by not allowing JuicePass, it gave an unfair competitive advantage to its own apps, such as the Google Maps app.
• On April 27, 2021 Alphabet announced Q1 2021 financial results. It reported $55.3 billion in revenue, a 34% year-over-year (YOY) increase, and $26.29 in earnings per share (EPS), a 166.4% YOY increase. Both these figures beat analysts’ expectations by a substantial margin.
• On April 23, 2021, Alphabet’s board of directors authorized $50 billion in share buybacks.
• On April 21, 2021, Associated Newspapers, the owner of the U.K. newspaper the Daily Mail, sued Google over its online advertising policies. Associated Newspapers claims that Google downgrades newspapers such as the Daily Mail in its search results if they don’t sell their advertising space on Google’s marketplace. Google called the claim “completely inaccurate.”
• On April 5, 2021, in a 6-2 decision, the U.S. supreme court ruled in favor of Google in a copyright dispute with Oracle. Oracle claimed that Google’s use of code from Oracle’s Java Application Programming Interface (API) violated its copyright on the software, and a lower court agreed, but the Supreme Court decided that it was fair use.
• On March 16, 2021, Google announced that, starting July 1, 2021, it was cutting the fee on its Google Play app store from 30% to 15% on the first $1 million in revenue a developer earns.
• On March 3, 2021, Google announced that it was planning to stop ad sales based on tracking individuals’ browsing history. After announcing in 2020 they would abandon tracking cookies by 2022, this decision confirms that they will not be replacing it with any new sort of cross-site tracking. As selling personalized ads based on tracking a person’s Internet usage is a large part of the current model of digital ad sales, this could mean substantial changes for the industry.
• On Feb. 25, 2021, Australia passed a law which mandates that Google and Facebook compensate media companies for news that users access through those platforms. The law allows the companies and publishers to negotiate deals themselves, and an arbitrator will come in to set a price only if this fails. In the lead up to the law’s passage, Google threatened to withdraw Google from Australia, but softened its stance and agreed to pay global media company News Corp and local Australian media companies Nine Entertainment and Seven West Media to license their content.
• On Jan. 25, 2021, Alphabet’s Google subsidiary announced that it was planning to remove third-party tracking cookies by some time in 2022, continuing on from an announcement in 2020. Tracking cookies pose significant privacy concerns, however, there is also concern that this is an anticompetitive measure meant to shift advertising to Google’s own advertising tools. The U.K.’s antitrust authority opened an investigation into the matter earlier in January.
• On Jan. 14, 2021, Alphabet announced that it had completed its $2.1 billion acquisition of wearable technology company, Fitbit.
• On Jan. 4, 2021, over 400 Google engineers formed the Alphabet Workers Union (AWU). The union is affiliated with the Communications Workers of America, which represents telecom and media workers in the U.S. and Canada.
• On Dec. 17, 2020, this was further followed up when 38 attorneys general alleged that Google was maintaining a monopoly on Internet searches through anticompetitive contracts and disadvantaging other search engines with its ad-sales tools.
• On Dec. 17, 202, 10 attorneys general followed up the Oct. 2020 DOJ suit with another alleging that Google had made an anticompetitive agreement with Facebook regarding online ad sales, while also leveraging its market power to overcharging publishers.
• On Oct. 20, 2020, the Justice Department filed suit against Alphabet subsidiary Google. The suit alleges that Google illegally protects its position in the search market by paying smartphone makers to make Google the default search engine on their devices.