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What Penalty Google Inc (GOOGL) Could Face Due To European Union’s Anti-Trust Accusation?

Google Inc (NASDAQ:GOOGL) was lately under fire from the European Union over the anti-trust issues. Google Inc (NASDAQ:GOOGL) is trying to defend their stand on all the complaints that the European Union is lodging against them. Meanwhile news broke out that the European Union has formally filed a complaint against Google Inc (NASDAQ:GOOGL) stating that the search engine giant is abusing its dominance in web searches. What could this mean for Google Inc (NASDAQ:GOOGL) stock and its future in the market. CNBC’s Josh Lipton reported about this on CNBC.

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Lipton reported that the European Union has delivered a blow to Google on Thursday morning by not only filing the anti-trust charges against the search engine giant but also announcing about a formal investigation into Google’s OS for mobiles, Android. He mentioned that Google quickly shot back with its reply through Google’s Head of European Economic Policy, Adam Cohen.

“But look at all the tremendous innovations and evolution that we have seen in the search engine industry over the past few years. We can’t stand still. We face enormous competitive pressure and we are going to respond to that in the market place. Separately we are going to have a discussion with regulators about how we do that,” Cohen said.

Lipton reported that the news about European Union filing complaint comes at a wrong time for the company. He pointed out that Google stock has gone nowhere in the last 12 months as investors worry that the search giant has missed the boat in social media by not jumping into it early. Some of the revenues from advertisements are starting to migrate to Facebook Inc (NASDAQ:FB) and other social media companies.

“Worst case scenario Google could face a potential $6 billion fine. The company does boast a cash pile of $60 billion,” Lipton reported.

Lipton added that the fine won’t be a huge setback for Google, since their cash pile is huge. He said that regulators could force Google to change its search business. He feels that those changes could have chilling effect on Google’s ability to be more innovative. He said that Google became dominant force in search engine by coming up with better algorithms when compared to all competitors.

Lipton also said that there could be a potential stock impact due to this European Union filing. He pointed out that Microsoft Corporation (NASDAQ:MSFT) underperformed when it faced anti-trust issues in Europe. Analysts though feel that this might have muted impact on Google Stock since the stock is already matured. RBC Analyst Mark Mahaney feels that if this had happened 5 years ago, it would have had significant impact on Google stock.

Lipton reported that final decision from EU would come by end of this year but Google should resolve this issue as quickly as possible, if not Google’s brand reputation might also take a hit.

Disclosure: None

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