A judge ruled parts of Google’s ad-tech business to be monopolistic, but an analyst notes the latest case concerns a relatively small portion of Google’s empire

Google partially lost an antitrust case that took aim at its ad-tech business.

Alphabet Inc.’s empire just got more threatened as a federal judge ruled that the internet giant acted monopolistically in the advertising-technology market. But investors shouldn’t fear the latest development so much.

On Thursday, an Eastern Virginia district court judge ruled that the company exerted monopoly power in the ad-server and ad-exchange markets, though not in ad networks. A Google vice president described the ruling as a partial win, saying that the company would appeal the rest.

“Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective,” Lee-Anne Mulholland, the company’s vice president of regulatory affairs, said in a statement.

Nonetheless, it’s the latest blow for Alphabet, after a different judge said back in August that Google’s search business was also a monopoly.

Compared to that ruling, this latest one is less significant, as Google’s ad-technology business is smaller than its search business. Google also hasn’t seen growth from ad tech in recent quarters, Edward Jones analyst David Heger told MarketWatch.

BMO Capital Markets analyst Brian Pitz noted in a report that Google Network “is a lower-margin business relative to Search and YouTube,” and that the company pays out to partners most of the ad revenue it gets from the network business, in the form of traffic-acquisition costs.

Still, it’s a meaningful development for Google, Heger said. From the company’s point of view, it’s “not good that now there are two different antitrust cases where they’ve lost at least in the first round,” he added.

Both matters could drag on for years, as the courts must determine what remedies Alphabet must take, plus there is the appeals process. That could be why Alphabet’s stock was off only about 1.4% on Thursday.

“The stock is trading down some but not dramatically,” Heger said. “The market still views this as a long way from an ultimate resolution.”

What comes next? In this case, the Justice Department previously had asked that Google pay damages and divest its ad-server and ad-exchange products. Now Wall Street will be waiting to see if those suggested remedies are going to change under the Justice Department’s new Trump appointees. In the other case, the government asked that Google be forced to divest its Chrome business. It will be up to the respective judges to decide which courses are appropriate. 

It’s hard to predict how the Trump administration will act here, according to Heger. On one hand, investors might have thought Trump’s appointees would take a softer line on antitrust issues, but they also seem to be staying the course on actions that were already ongoing.

While some have argued that a breakup wouldn’t necessarily be a bad thing for Alphabet investors, as it could unlock sum-of-the-parts value, Heger noted that ad tech is probably the lowest-valued part of Google’s business. It’s difficult to know what will happen, he added, but a forced separation of the ad-tech business “if anything … would perhaps enhance the growth numbers of the rest of the business.”