Key points:
- DOJ considers breaking up Google after ruling that it illegally monopolised the online search market.
- Possible divestments include Android, Chrome, and AdWords, which could reshape the tech landscape.
- Short-term traders should monitor volatility in GOOG share price and potential ripple effects in the tech sector.
The US Department of Justice (DOJ) is weighing several options to address the recent court ruling that found Alphabet’s Google (Symbol: GOOG) illegally monopolised the online search market.
Among these options, breaking up Google into smaller entities, such as divesting the Android operating system, the Chrome web browser and the AdWords advertising platform, is gaining attention.
Image: GOOG price moved lower as the DOJ considers breaking up Google, as observed on the VT Markets app.
On the analytic front, the chart for GOOG on the 1-hour timeframe displays a slight upward trend, with the price currently at 165.92 after opening at 164.88 and reaching a high of 166.46. The EMA lines (24,24,72) show a convergence, indicating a possible transition from the previous downtrend to a potential uptrend – a key sign that means that investors are generally still hopeful.
The MACD histogram is transitioning from negative to positive, with the MACD line crossing above the signal line, suggesting that bullish momentum may be building. Despite the negative news, the chart highlights a potential recovery after a recent low of 156.59, and traders might look for a break above 170.00 for confirmation of further bullish movement.
Market implications if Google breaks
If the DOJ decides to proceed with breaking up Google, the tech landscape could undergo a seismic shift.
For Alphabet, a breakup could mean that each of its components – Android, Chrome, AdWords – might operate independently, potentially increasing competition within the tech industry.
However, this could also lead to short-term disruptions in Alphabet’s stock performance, as the market reassess the value of its individual components.
Opportunities and risks
The uncertainty surrounding Google’s future could lead to increased volatility in Alphabet’s stock. Traders might see swings in share prices as the market digests new information about potential DOJ actions.
This volatility could present day trading opportunities, particularly for those using strategies that capitalise on rapid price movements.
However, traders should also be cautious. The tech sector could experience ripple effects if a breakup is announced. Investors might rotate out of tech stocks temporarily, seeking safer assets amid the uncertainty. Additionally, any negative sentiment could affect other Big Tech stocks, given their interconnectedness within major indices.
