Alphabet fails to overturn $2.7B EU antitrust fine. The cost of dominance? (09/11/2024)

Hello, everyone! This week, we will focus on $Alphabet-C (GOOG.US)$ , the parent company of Google, which is currently under scrutiny from antitrust regulators. In this article, we'll explore the latest trends and examine the company's recent market activity.

What's new?

On September 10, 2024, the Court of Justice of the European Union (CJEU) upheld a €2.4 billion ($2.7 billion) fine against Alphabet's Google for abusing its dominant market position by favoring its own shopping services over local competitors.

This penalty was initially imposed by antitrust regulators in 2017. After a lower court rejected Google's first appeal in 2021, the case went to the CJEU, which confirmed that while Google can hold a dominant position, it cannot abuse it.

Google is also facing another legal battle in the EU that could force it to divest parts of its adtech business due to similar allegations of favoritism. The EU Commission has preliminarily concluded that only "mandatory divestment" of certain services would effectively address the competition concerns, given Google's reluctance to change its practices.

In total, Google has accumulated €8.25 billion ($9.12 billion) in antitrust fines from the EU over the past decade.

Google now faces particular pressure over its highly profitable digital advertising business. In a federal antitrust trial that commenced on September 9, the US Department of Justice (DOJ) is accusing the company of monopolizing the adtech industry.

The DOJ argues that while Google's search engine may have served as the "killer app" that drew millions of daily users, it was the company's advertising technology that enabled Google to monetize a substantial portion of the web. Furthermore, the DOJ claims that Google engaged in illegal practices to stifle competition in this sector.

Chart of the day

Trend analysis:

Alphabet's shares (GOOGL) experienced a significant upward trend since early November 2022, surging by 120% as of July 2024. However, the stock has since entered a correction phase, retracing approximately 38.2% of its previous gains, as illustrated by the Fibonacci retracement tool on the weekly chart above.

On the daily chart, the price has fallen more than 20% from its all-time high of $191, entering bear market territory from a technical perspective. At present, a potential inverted cup and handle pattern is emerging, suggesting the likelihood of further price decline.

Technical indicators:

● GOOGL has been trading below the 50-day moving average (MA50) for the past month and a half, suggesting a market correction in prices. The stock has recently fallen below the 200-day moving average (MA200), a key indicator of mid-term market sentiment, signaling a potential bearish trend.

● Although the price has declined to a six-month low, several momentum oscillators, including the moving average convergence/divergence (MACD) and the relative strength index (RSI), are holding above their previous lows, signaling a bullish divergence. Additionally, with the RSI crossing above the oversold threshold of 30, a potential buy signal may have emerged.

Next move?

On a broader time frame, like the weekly chart, GOOGL remains in a correction phase, retracing from a substantial uptrend that propelled it to an all-time high.

Conversely, on a shorter time frame, such as the daily chart, although the stock is presently experiencing a downward trend, there are early indications of a potential short-term price rebound. Traders might closely monitor the MA200 as a key indicator for assessing market sentiment.

This presentation discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve.

All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.