By HVY Journalists: It’s become increasingly obvious that the U.S. Department of Justice will launch an antitrust suit against Google and its parent company, Alphabet. When the DOJ officially files its suit, which it will, and if it wins, which it likely will, the stock market will crash by as much as 50%.
A Replay of 2000
The stock market is looking at an exact replay of the dot-com bubble and how it burst.
In 1999 and early 2000, the stock market soared to its most expensive valuation in history, well beyond the 1929 stock market. Led by large-cap tech companies and money-losing dot-com businesses, the stock market was literally valued at heights that could never have been justified.
When the judge in the Microsoft antitrust suit issued his conclusions of law on April 3, 2000, Microsoft’s stock fell 15% and the Nasdaq fell 8%. The decline had started.
The psychological seed had been planted: Microsoft was not invincible. Suddenly all those internet businesses that were not making money were looking very risky.
Alphabet Is Yesterday’s Microsoft Monopoly
The same thing will happen with Alphabet’s stock.
The DOJ will relentlessly pursue the company, and Alphabet’s stock will suffer. Why? Because we’ve already seen President Donald Trump pressure the DOJ to pursue a case that didn’t have any merit: the AT&T–Time Warner merger.
Donald Trump hated CNN, a division of Time Warner. That case should never have been brought, yet it was for political reasons.
In the case of Alphabet, Trump and the rest of the conservative political world have plenty of reasons to go after the tech giant.
Restraint of Trade
Monopoly power alone isn’t enough to justify an antitrust suit. However, there seems to be an unfair restraint of trade going on. It’s one thing to prohibit advertisements for companies that Alphabet doesn’t like.
It’s another to rejigger its search system to destroy businesses, which is what recently happened with Google’s “core update.”
It’s yet another to suppress search results, which are themselves tied to revenue generation, or to de-monetize YouTube channels due to unquestionably arbitrary and capricious “guidelines.”
That’s restraint of trade.
The DOJ will go after Alphabet hard; and while it will take a while, the DOJ is going to win.
The First Domino
The stock market will have another powerhouse leader get taken down. That means investors will suddenly fear for Facebook, and then all the speculation that has pushed this stock market to its third most expensive valuation in history will vanish.
And it will all come crumbling down.