Alphabet (GOOGL) attracted attention for the wrong reasons on Wednesday morning.
The Silicon Valley stalwart is drawing the enmity of the European Commission in the form of an over $1 billion fine...again.
This time, the commission has lodged a €1.49 ($1.7) billion fine on the Sundar Pichai-led company. The penalty is Alphabet's third 10-figure antitrust fine in just two years, headlined by a record $5.1 billion fine in 2018 for issues related to its Android apps.
"Today the Commission has fined Google €1.49 billion for illegal misuse of its dominant position in the market for the brokering of online search adverts," EU commissioner Margrethe Vestager said in a statement. "The misconduct lasted over 10 years and denied other companies the possibility to compete on the merits and to innovate - and consumers the benefits of competition."
The press release states that Google ceased its anti-competitive practices following a statement of objection in 2016, but received the latest fine based on its years of impeding on the regulation.
Google SVP of Public Affairs Kent Walker accepted the fine and reiterated the company's aim to comply with the commission's regulations.
"For nearly a decade, we've been in discussions with the European Commission about the way some of our products work. Throughout this process, we've always agreed on one thing - that healthy, thriving markets are in everyone's interest," he wrote in a blog post.
Walker noted that the company has shifted its policies in the wake of recent fines and put them in line with the expectations of the European regulators in order any further infractions.
Cost of Doing Business?
Despite the bad press, many were not overly concerned by the not-so-new development.
For one, Alphabet wields $110 billion in cash and cash equivalents as of March 19. That makes the seemingly large fine of $1.7 billion only a just over 1% dent in the company's colossal cash pile. Not a major cause for panic.
The fine is even smaller when compared to the total revenues Google is able to generate.
For reference, the approximately $137 billion in revenues generated by Alphabet in 2018 translates to an hourly revenue generation of about $15.6 million. At that rate, it would take the company less than five days to cover its most recent fine.
More cynical market minds were inclined to believe this is just another flashy action from the fine-happy European commission.
"This was not predatory behavior from what I can tell. I think it is just what happens in Europe when someone is very powerful," Action Alerts PLUS portfolio manager Jim Cramer commented. "I think it's one of the reasons we like America."
Shares of the tech giant rose about 1% at daily highs on Wednesday, suggesting the pre-market negativity has worn off quickly as the market moves its gaze to the company's new gaming effort.
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