Alphabet (GOOGL), the parent company of Google, saw its stock plummet 5.03% during Friday's trading session, as investors reacted to news of a significant legal settlement and broader market pressures affecting tech stocks.
The primary catalyst for the stock's decline was the announcement that Google had agreed to pay $100 million to settle a long-running class-action lawsuit. The case, which began in 2011, accused the company of overcharging advertisers by failing to provide promised discounts and charging for clicks on ads outside targeted geographic areas. The settlement covers advertisers who used Google's AdWords program (now Google Ads) between January 1, 2004, and December 13, 2012. While Google denied wrongdoing, the company stated it was pleased to have resolved the matter.
Adding to the downward pressure, Alphabet's stock was caught in a broader selloff affecting major tech companies. Other "Magnificent Seven" stocks, including Amazon, Tesla, and Meta Platforms, also experienced significant declines, reflecting investor concerns about valuations and market conditions. The Roundhill Magnificent Seven ETF, which tracks these top tech giants, was down 2.5%, indicating a sector-wide trend.
In a separate development, an Indian appeals tribunal reduced an antitrust penalty on Google from $113 million to $30 million related to the company's in-app payment system practices. While this news might be seen as a minor positive, it was overshadowed by the larger settlement and market dynamics.
The combination of the costly lawsuit settlement, broader market selloff, and ongoing regulatory scrutiny appears to have shaken investor confidence in Alphabet, leading to the significant drop in share price. As the company continues to navigate legal challenges and competitive pressures in the tech sector, investors will be closely watching for signs of how these factors may impact Alphabet's long-term growth and profitability.
Comments