What Does the Google Antitrust Trial Mean for ETFs?

Breaking down the largest antitrust case since Unites States v. Microsoft and what Google's monopoly on search engines could mean for ETFs.

kent
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Research Lead
Reviewed by: Ron Day
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Edited by: Ron Day

The future of the internet will be debated in the coming 10 weeks, as the United States Department of Justice hears evidence to determine whether Google broke the law in the largest antitrust case in 25 years. In this article, we break down the Google antitrust case and take a look at which ETFs have the highest exposure to Google stock, some of which exceed 20% allocation. 

DOJ Alleges Google Monopoly in Antitrust Case 

On Sept. 12, the Justice Department opened its antitrust case against Google, which was first filed nearly three years prior. The case alleges that, over the past 15 years, “Google has engaged in a course of anticompetitive and exclusionary conduct that consisted of neutralizing or eliminating ad tech competitors through acquisitions.”  

Thus, Google, whose parent company is Alphabet Inc., has illegally forced its search engine dominance in tools relied on by website publishers and online advertisers, the department alleges. 

Through the end of the year, federal and state prosecutors will attempt to demonstrate that Google abused its market power by making its search engine the default option in a variety of platforms and devices. U.S. District Judge Amit Mehta is unlikely to issue a decision until early 2024. If he finds that Google violated the law, another trial will be held to determine what steps should be taken to restrain the Mountain View, California-based company. 

Google Antitrust Case Largest Since United States v. Microsoft 

The Google antitrust case is the largest since the 1998 landmark case, United States v. Microsoft. In that case, the DOJ imposed behavioral remedies on Microsoft. While it did not lead to the breaking up of the company, it did have a lasting impact on Microsoft's business practices and the broader technology industry. Some argue that the case paved the way for increased competition and innovation in the technology sector. 

ETFs With Largest Google Stock Exposure  

Google stock has two share classes, which are Alphabet Inc. Class A (GOOGL) and Alphabet Inc. Class C (GOOG). The primary difference between the two share classes is that that Class A shares offer voting rights and Class C shareholders do not have voting rights. The ETF with the largest Google stock exposure is iShares Global Comm Services ETF (IXP), with 12.89% in GOOGL and 11.15% in GOOG, totaling 24.04% allocation.

Here are the ETFs that have the highest percentage allocation to Google stock, broken down by share class, as of September 12, 2023: 

ETFs With Largest GOOGL Stock Exposure 

TickerFund% Allocation
GGLLDirexion Daily GOOGL Bull 1.5x Shares ETF19.26%
IXPiShares Global Comm Services ETF12.89%
XLCCommunication Services Select Sector SPDR Fund12.88%
FCOMFidelity MSCI Communication Services Index12.78%
VOXVanguard Communication Services ETF11.84%

 

ETFs With Largest GOOG Stock Exposure 

TickerFund% Allocation
IXPiShares Global Comm Services ETF11.15%
XLCCommunication Services Select Sector SPDR Fund11.14%
FCOMFidelity MSCI Communication Services Index10.52%
VOXVanguard Communication Services ETF9.80%
ACSIAmerican Customer Satisfaction ETF8.33%

 

How the Google Antitrust Case Could Affect ETFs 

The outcome of the Google antitrust lawsuit could have a significant impact on Google stock price and the prices of ETFs that hold the stock. If the DOJ is successful in its lawsuit, it could force Google to change its business practices while opening up the market to more competition. This could lead to lower prices for consumers and more choices for businesses, hurting Google's profits. 

However, it’s also possible that the DOJ will lose its lawsuit, or the outcome may be less severe than the market expects. In this case, Google stock price could rise, as investors would be confident that the company will continue to be a dominant player in the search and advertising markets. 

The Bottom Line on the Google Monopoly Lawsuit 

Ultimately, the impact of the Google antitrust lawsuit on Google stock price and the prices of ETFs that hold the stock, as well as the broader technology sector, will depend on the outcome of the case and the specific remedies that are imposed on Google. If the outcome is similar to that of the landmark 1998 Microsoft case, Google could go on to be a dominant player in the tech sector for decades to come. 

Kent Thune is Research Lead for etf.com, focusing on educational content, thought leadership, content management and search engine optimization. Before joining etf.com, he wrote for numerous investment websites, including Seeking Alpha and Kiplinger. 

 

Kent holds a Master of Business Administration (MBA) degree and is a practicing Certified Financial Planner (CFP®) with 25 years of experience managing investments, guiding clients through some of the worst economic and market environments in U.S. history. He has also served as an adjunct professor, teaching classes for The College of Charleston and Trident Technical College on the topics of retirement planning, business finance, and entrepreneurship. 

 

Kent founded a registered investment advisory firm in 2006 and is based in Hilton Head Island, SC, where he lives with his wife and two sons. Outside of work, Kent enjoys spending time with his family, playing guitar, and working on his philosophy book, which he plans to publish in the coming year.