Google’s antitrust lawsuit will have “minimal” financial impact, analysts say

from Google GOOGLE The second major antitrust trial this year, this time focusing on its dominance of the advertising market, will begin next Monday. But Wedbush analysts are not too concerned about the business impact of the case.

“The overall risk to the business is limited” based on Google’s recent financial disclosures about its ad tech products, a group of Wedbush analysts led by Scott Devitt wrote in a research note published on Thursday.

In January 2023, the Department of Justice sued Google, claiming the tech giant engaged in “anti-competitive, exclusive and unlawful conduct to eliminate or seriously diminish any threat to its dominance of digital advertising technologies.”

Department of Justice estimate that Google’s share of the adtech market was between 40% and 90% as of 2022.

This upcoming trial focuses on Google’s technology stack, specifically Ad Manager, the platform that helps publishers and advertisers manage and buy and sell advertising on sites. The federal government’s complaint only proposes divestment of Google’s Ad Manager Suite, but does not target any of the other areas of Google’s adtech technology stack, Wedbush noted.

“Based on our review of the case documents and available exhibits, we believe that if the company were required to divest the Google Ad Manager business, the financial impact on overall operations would be minimal,” the analysts said.

According to court filings reviewed by Wedbush, Google Ad Manager accounted for just 4.1 percent of Google parent Alphabet’s total revenue and 1.5 percent of operating profit in 2020. Analysts estimated the division accounted for less than 1 percent of operating revenue in this year.

To be sure, analysts recognize the “principal short-term risk,” or potential reputational repercussions, associated with the lawsuit.

This follows a ruling in a separate antitrust case, which found that Google had monopolized the online search engine marketpushing out competitors like DuckDuckGo and Microsoft’s Bing. This was the first major technology antitrust lawsuit since US v. Microsofta 1998 case that similarly found computer operating systems monopolized by Microsoft.

Google said it plans to appeal the court’s decision. A hearing in the case is scheduled for Friday to discuss next steps, which it looks like it might involve dissolving certain parts of its business or renouncing agreements with companies, like Applewhich made Google the default search engine.