Barclays Analysts on Google's Antitrust Case Remedial Proposal

Investing.com — Barclays analysts indicated that Google’s proposed remedies in its antitrust case could significantly benefit Alphabet (NASDAQ: GOOGL) shares.

The Proposed Final Judgment (PFJ) remedies, outlined by Google, suggest a potential increase of 10% or more in operating income—an encouraging outcome for the company.

According to Barclays (LON: BARC), Google's remedy package addresses roughly half of the concerns raised in the court’s August 5 decision about exclusive default contracts.

> "If the court accepts these remedies, Google’s revenue would largely remain unchanged, and its operating income would likely increase," the note indicated.

This contrasts with the Department of Justice’s (DoJ) recommended remedies, which Google views as "overly punitive."

Google’s defense emphasizes the need for a balanced approach to antitrust remedies. Barclays points out that Google has urged the court "to be careful not to have too heavy a hand when it comes to enhancing consumer welfare."

The bank believes that a reduction in the TAC rate on all distribution deals, while retaining approximately 100% of commercial queries, would be advantageous for the tech giant.

The stakes are considerable, as Google’s trading multiple has declined 10%-20% since losing the monopoly trial.

Barclays argues that a favorable ruling on Google’s remedies could trigger a strong rally in GOOGL shares. "If these remedies are selected (a significant 'if') over the DoJ's, GOOGL shares would likely rally significantly," the analysts commented.

In parallel, analysts at Bank of America observed that Google’s proposal would result in a more positive outlook compared to the DoJ's, particularly because of the inclusion of revenue sharing. They believe this would incentivize Apple (NASDAQ: AAPL) and other OEMs to continue using Google for search.

However, they cautioned that the proposal could encourage greater competition on mobile devices from existing app and browser competitors, as well as new AI entrants like AI browsers or assistants from Samsung (KS: 005930).