Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) stock didn’t finish the trading week on a high note. The Google parent company’s two listed shares both sank by nearly 4% in price that day, thanks in no small part to a development on the regulatory front. Those declines were notably more pronounced than the S&P 500 index’s 0.2% slip on the day.
An unappealing request?
Alphabet’s key business unit Google is on the hook to pay a 4.1 billion euro ($4.7 billion) fine to the European Union (EU), after it ruled in 2018 that the company actively stifled search engine competition with its Android mobile operating system. The tech giant has, not surprisingly, appealed that fine.
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That appeal is now pending at the highest court in the EU, the Court of Justice of the European Union (CJEU).
In what has to be considered a setback for Google/Alphabet, the CJEU’s advocate-general — the court’s top advisory official — recommended that Google’s appeal be dismissed. In her recommendation, Juliane Kokott said that “Google held a dominant position in several markets of the Android-ecosystem and thus benefited from network effects that enabled it to ensure that users used Google Search.”
Although Kokott’s recommendations are non-binding, CJEU justices typically accept and follow the advice of the court’s advocate-general.
Alphabet has not yet publicly commented on this latest development in its appeal.
One break was enough
Alphabet did get something of a break with the fine, as it was cut slightly from the original amount of over 4.3 billion euros ($4.9 billion) to the 4.1 billion euros currently hanging over it.
The company, sprawling and powerful as it is, can easily afford the fine in the likely case its appeal fails. However, a defeat would illustrate Alphabet’s continued vulnerability to anti-competitive lawsuits like the EU’s.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
