What Happened?

Shares of online advertising giant Alphabet (NASDAQ:GOOGL) fell 2.5% in the morning session as the Department of Justice is reportedly exploring a breakup of the Google division along with other options.

According to a government court filing, "That would prevent Google from using products such as Chrome, Play, and Android to advantage Google search and Google search-related products and features — including emerging search access points and features, such as artificial intelligence — over rivals or new entrants." This follows a federal judge ruling in August 2024 that Google violated U.S. antitrust laws.

Google responded in a blog post, "We believe that today's blueprint goes well beyond the legal scope of the Court's decision about Search distribution contracts. Government overreach in a fast-moving industry may have negative unintended consequences for American innovation and America's consumers. We look forward to making our arguments in court."

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What The Market Is Telling Us

Alphabet’s shares are quite volatile and have had 19 moves greater than 2.5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

Alphabet is up 16.5% since the beginning of the year, but at $160.98 per share, it is still trading 15.8% below its 52-week high of $191.18 from July 2024. Investors who bought $1,000 worth of Alphabet’s shares 5 years ago would now be looking at an investment worth $2,678.

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