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Google Chrome in the Crosshairs: 64% Oppose Alphabet Split, YouTube Emerges as Crown Jewel

Wesley ParkFriday, Nov 22, 2024 10:36 am ET
4min read
The Department of Justice (DOJ) has turned its antitrust spotlight on Google Chrome, proposing the browser's divestment to curb Google's search engine monopoly. A recent poll, however, suggests that many investors are not on board with a full-blown breakup of Alphabet, with 64% opposing the idea. In this scenario, YouTube stands out as the most coveted unit, should Alphabet decide to split.

The DOJ's latest filing, submitted on Wednesday, outlined a range of remedies to address Google's antitrust violations, with the most drastic being the forced sale of Chrome. The government argues that this move would open the search market to more competition, benefiting consumers and rivals alike. However, the proposal has been met with strong opposition from Google, which claims that the remedies go "wildly overboard" and would "harm Americans and America’s global technology leadership."

A poll conducted by Benzinga revealed that a majority of readers (64%) do not support the breakup of Alphabet, suggesting that investors may be more inclined to maintain the status quo. In a hypothetical scenario where Alphabet were to split, YouTube emerged as the top choice for investors, with 43% indicating that they would most want to invest in the video-sharing platform.



YouTube's appeal lies in its extensive user base and content library, which differentiates it from other Alphabet units. With over 2 billion users and an extensive library of user-generated videos, original programming, and exclusive content deals, YouTube has proven to be a cash cow for Alphabet. Its ad-supported business model, supplemented by a premium subscription tier, has been a successful revenue generator.

Operating independently, YouTube could explore new business models, such as subscription content and in-app purchases, without Google's influence. This could lead to increased revenue and market share, as seen with Netflix and Spotify. However, independence might also expose YouTube to increased competition, as other platforms could leverage their own unique offerings to attract users. Additionally, YouTube's independence could strain relationships with Google, potentially impacting shared resources and user bases.

GOOGL Total Revenue YoY, Total Revenue


Despite these challenges, YouTube's vast user base and content ecosystem give it a strong competitive advantage, making it a promising standalone entity. Investors should consider allocating capital to YouTube if Alphabet were to break up, given its robust ad revenue growth and dominant market position. In April 2024, YouTube generated $8 billion in quarterly ad revenue, up 21% year-over-year, and Nielsen data shows it's the most-watched streaming service in the U.S. for over a year.

In conclusion, while the DOJ's proposal to break up Alphabet may face public opposition, it is essential to consider alternative restructuring strategies that could address antitrust concerns without fully separating YouTube. Google could spin off Chrome or Android, agree to share more data with competitors, or divest its advertising technology business. These alternatives would allow Alphabet to maintain control of YouTube, while still addressing the DOJ's antitrust concerns. Ultimately, investors should remain focused on the enduring business models and market dynamics of each Alphabet unit, making informed decisions about capital allocation in a post-breakup scenario.
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the_doonz
11/22
$GOOGL What is a computer virus? It’s akin to a terminal illness.
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therealchengarang
11/22
$GOOG Just like an elastic, there's a limit to how much an asset can rebound and return to its original shape.
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Surfin_Birb_09
11/22
$GOOG
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applesandpearss
11/22
By next Tuesday, $GOOG is aiming for 170. Better place those call options now.
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ultrapcb
11/22
Google's antitrust woes might get more interesting, but Alphabet’s diverse portfolio makes a breakup tricky. If Alphabet goes, YouTube could shine. 🤑
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Urselff
11/22
Holding $GOOGL long term. Don't sweat the noise, just focus on solid units. Diversification is key.
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Woleva30
11/22
Google can't handle competition? Weak sauce
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TobyAguecheek
11/22
Poll says 64% against Alphabet breakup. Investors know what they're doing, unlike some gov agencies.
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vaxop
11/22
Chrome's gotta go, keep YouTube tight
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SomeSortOfBrit
11/22
YouTube as the crown jewel? Makes sense. Could be a cash cow if spun off. Might grab some if it goes solo.
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ashish1512
11/22
DOJ wants to shake up Alphabet's tree 🤔
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GarlicBreadDatabase
11/22
Holding $GOOGL long; YouTube's my cash cow
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mrpoopfartman
11/22
DOJ going after Chrome? Seems like they're playing favorites. Remember when regulators were cool? 😂
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