Alphabet: Impact From the Unfavorable Epic Games Decision Will Likely Be Minimal

While a jury on Dec. 11 decided against Google in the antitrust case brought by Epic Games, we are maintaining our $161 fair value estimate on parent company Alphabet. Alphabet will appeal the decision and, if it reaches the U.S. Supreme Court, we believe the firm's consumer welfare argument will likely be favored by the justices. We think the Supreme Court will consider that, in the long run, Google Play provides the biggest audience and best opportunity for developers to monetize their work on Android phones, for which Google should be compensated. Plus, while the firm may no longer be allowed to force Android phone manufacturers to default to its app store, we expect Android smartphones users will still favor Google's app store, as it likely provides a wider selection of apps.