Analysts have reset their price target on Alphabet shares ahead of the key event in September

“Where should we go for dinner?” is probably a hot search question on Google. Yelp is not happy about it.

On August 28, Yelp filed a lawsuit against the search giant, claiming that Google used its dominance to gain an unfair advantage in local search services. The lawsuit came after a federal judge declared Google an illegal monopoly that same month.

“When a consumer performs a Google search with local intent, Google manipulates its results to promote its own local search offerings over those of its rivals, regardless of the comparatively lower quality of its own properties,” said the CEO of Yelp’s Jeremy Stoppelman in a press release. , “This anti-competitive conduct siphons traffic and advertising revenue from vertical search services.”

This is not the first time Yelp has accused Google of unfair practices. In 2011, Stoppelman testified in Washington, claiming that Google had taken Yelp’s content without giving proper credit, Business Insider reported.

Related: Top Value Fund Manager Says Google Parent Alphabet Is Great Value Stock

The stories between Yelp and Google Alphabet date back longer. In 2009, Google proposed to acquire Yelp for $550 million, but Yelp rejected Google’s offer.

August was a tough month for Google. On August 14, Bloomberg reported that the US Department of Justice is considering breaking up Google, with potential divestment targets being Google’s Android operating system and Chrome web browser. Officials are also considering whether to ask to sell AdWords, the platform Google uses to sell text ads, the news service reported.

Macquarie described the potential split as “the trial of the century”, highlighting it as a significant event in online advertising that “gets surprisingly little attention”. The investment firm sees potential gains for ad-tech companies if Alphabet loses this court battle.

The DoJ trial against Google’s ad technology is scheduled to begin on September 9.

Alphabet’s search segment remains its biggest revenue contributor.

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Alphabet relies heavily on search revenue

Alphabet (GOOGLE) released a solid second-quarter earnings report in July. Revenue was $84.74 billion, up 14% from a year earlier and beating the $84.19 billion expected by analysts. Earnings of $1.89 per share were also higher than the forecast of $1.84 per share.

The revenue growth was driven by the company’s search and cloud segments, which grew 14% and 29% year-over-year, respectively.

The cloud segment reached more than $10 billion in quarterly revenue and $1 billion in operating profit for the first time. YouTube ad sales of $8.66 billion fell short of the $8.93 billion expected by analysts.

Alphabet’s search segment remains the largest revenue contributor, generating $48.5 billion, which is 57% of total revenue at the end of the second quarter. The DoJ lawsuit could result in a major setback if the search engine were to be separated from the company.

Alphabet also said it is accelerating AI advances by building AI models in Google Research and Google DeepMind. “We’re innovating at every level of the AI ​​stack,” said Chief Executive Sundar Pichai.

But Justice Department lawyers have expressed concern that Google’s dominance in search gives it an edge in developing AI technology. The government may also consider preventing Google from requiring websites to allow their content to be used for AI products, according to Bloomberg.

Related: Alphabet’s earnings are still on track, given parent Google’s AI costs

Analyst Rethinks Alphabet Share Price Target Ahead of DoJ Trial

Morgan Stanley lowered Alphabet’s price target to $190 from $205 and maintained an overweight rating. The investment firm’s analyst identifies three main issues that the DoJ and the judge aim to address: competitive intensity, data scale advantages and anti-competitive pricing.

Morgan Stanley also expects long-term uncertainty to keep Alphabet’s stock valuation lower.

TheStreet Pro technical analyst Bruce Kamich weighed in on Alphabet stock in mid-August, citing concerns that “traders are voting with their feet and selling.”

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“GOOGL has corrected over the last six weeks, but I don’t feel like the sell-off is over,” Kamich said.

David Miller, chief investment officer at Catalyst Funds, expressed a positive outlook on Google’s market dominance.

“I don’t have a strong reason not to own more (Google shares). It’s a company that will continue to grow, with exceptional margins and near-monopoly status. It trades at about 21 times forward earnings,” Miller said.

“Looking ahead 10 years, I’ll probably regret not having a bigger position because they could easily continue to dominate.”

Related: Veteran fund manager sees world of pain coming for stocks