Main financial assets discussed in the article:
1. Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) stock
2. Google Cloud segment
3. YouTube division
Top 3 key points:
1. Alphabet reported strong revenue growth in Q2 2023, driven by its Search and Cloud services. Google Search and advertising revenues reached $66.3 billion, while Google Cloud segment revenues reached $8 billion.
2. Alphabet showcased significant progress in AI development, with advancements in large language models and the incorporation of AI into various products. The company unveiled the Search Generative Experience (SGE) and leveraged generative AI in advertising and user creativity.
3. YouTube experienced significant growth, with revenues reaching almost $40 billion in the 12 months ending in March. The platform saw increased user engagement, particularly on connected TV screens, and introduced new ad offerings for Shorts and Connected TV.
Recommended actions: **Buy** Alphabet Inc. (GOOG, GOOGL) stock. The article highlights the company's strong revenue growth, progress in AI development, and success in the Google Cloud and YouTube divisions. These factors suggest a positive outlook for Alphabet's stock.
Apple executives Eddy Cue, John Giannandrea, and Adrian Perica will testify in an antitrust investigation into Google's alleged abuse of its search engine dominance, despite Apple's argument that it would be burdensome; Apple's multi-billion dollar deal with Google is a key aspect of the case.
The US Justice Department has started a 10-week trial against Google, accusing the company of monopolistic practices in dominating the search engine market through its business partnerships, including with Apple, to ensure its search engine is the default on mobile devices.
Google will face a high-stakes antitrust trial brought by the US government and multiple states, which could have significant implications for the tech giant's dominant search business.
Google maintains a dominant position in the global search engine market with a 90.7% market share, while its competitors like Bing and Yahoo lag far behind, according to data from Similarweb. However, Google is currently facing a civil antitrust lawsuit by the U.S. Justice Department for alleged anticompetitive practices. Bing, despite its AI-powered version, has not made significant progress in challenging Google's dominance.
The Justice Department's antitrust trial against Google began with claims that the company pursued agreements to be the default search engine on mobile devices, while Google argued that its search engine's quality was the primary reason for such agreements.
Google has reached a $93 million settlement with the state of California after being accused of collecting consumers' data without their consent.
DuckDuckGo CEO testifies in federal court that Google's exclusive contracts hindered the search engine's efforts to become the default for private browsing modes in other browsers.
The Department of Justice has filed an antitrust lawsuit against Google, alleging that the company's billion-dollar deals to be the default search engine on smartphones have created a monopoly, and if the trial is successful, Google may be forced to break up its various businesses.
Apple senior vice president Eddy Cue is expected to testify in court that Apple chose Google as the default search engine on the iPhone because it was the best product and that Apple has revenue-sharing agreements with other search engines, shedding light on Google's licensing agreements and the accusation of monopolizing online search.
Google, formed in 1998, is celebrating its 25th birthday as the most visited website and leading search engine, with a brand value of $207bn, dominating 92% of the market share and providing various Doodle games for entertainment.
Google, once a simple search engine, has evolved into a giant corporation with a diverse range of services and products, but its lack of focus and clarity on its direction has led to a quarter-life crisis and an apparent neglect of its core products and competition, making it appear unreliable and causing a loss of customer confidence.
Microsoft CEO Satya Nadella testified in an antitrust trial that Google's dominant search engine position is due to default deals with smartphone makers, arguing that user choice is "completely bogus" and defaults are the key factor in search behavior.
Google, founded by Larry Page and Sergey Brin, started as a search engine called BackRub and used Lego servers, and now dominates the internet with over 8.5 billion daily searches and revenues exceeding $200 billion annually.
Apple has the potential to compete with Google in building a search engine, as it has a strong search team and has developed a next-generation search engine called "Pegasus," but currently, Apple benefits from the $15 billion annual payment it receives from Google to keep Google Search as the default on Safari.
Microsoft CEO Satya Nadella testified in Google's antitrust trial, stating that Microsoft and its search engine Bing cannot compete with Google due to the default search engine deals Google has made with partners like Apple and Samsung, creating a "vicious cycle" for Microsoft.
Apple has turned down opportunities to challenge Google's search engine dominance, including the chance to purchase Bing and make DuckDuckGo the default for Safari's private browsing mode, according to court transcripts unsealed in the US government's antitrust lawsuit against Google.
Apple considered replacing Google with DuckDuckGo as its default search engine in private browsing mode, according to recent testimony by DuckDuckGo CEO Gabriel Weinberg in the Department of Justice's antitrust case against Google.
Apple executive John Giannandrea dismissed the idea of making DuckDuckGo the default search engine in Safari's private browsing mode due to concerns about its privacy claims and reliance on Bing, according to unsealed transcripts from the US antitrust trial over Google search.
Apple considered buying or investing in the Bing search engine in 2018 as an alternative to Google for Siri and other features, according to testimony from Apple's head of machine learning, John Giannandrea, in the Department of Justice's antitrust case against Google. However, the deal with Microsoft did not go forward, and Apple ultimately chose to continue its partnership with Google.
Google's payment to Apple for maintaining its position as the default search engine on iOS devices is estimated to be between $18 billion and $20 billion per year, according to financial advisor Bernstein, with the deal accounting for 14-16% of Apple's annual operating profits; however, the ongoing antitrust trial against Google could put this agreement at risk.
The antitrust case against Google puts the annual payment it makes to Apple for being the default search engine at risk, which constitutes 14-16% of Apple's profits, but Bernstein analysts believe Apple has options to mitigate the potential impact, such as partnering with another search engine or launching its own.
Apple's long-standing and lucrative agreement with Google to have it as the default search engine on Safari across its products has prevented Apple from developing its own search product and solidifies Google's dominance in the search industry, according to evidence presented in the US v. Google antitrust trial.
Google pays Apple between $18 and $20 billion per year to be the default search engine on iPhones, representing roughly 15% of Apple's annual operating profits, and there is a possibility that federal courts could force Google to terminate its search deal with Apple as part of the Department of Justice's antitrust lawsuit against Google.
Google could be paying Apple between $18 billion to $20 billion a year to maintain its status as the dominant search engine on the iPhone, potentially generating 14-16% of Apple's annual operating profits, but this agreement may be at risk due to an ongoing antitrust suit.
The U.S. Department of Justice is leading a major antitrust trial against Google, accusing the search engine company of using illegal methods to crush competition and maintain an unfair advantage; if ruled in favor of the government, the trial could result in new online search possibilities for users and businesses and potentially change the way Google operates in the future.
