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Alphabet (GOOG -3%) slips today following a Bloomberg report yesterday after the close that the U.S. Justice Department is considering breaking up the tech giant, among several other options. The news follows last week's ruling that GOOG violated search-related antitrust laws. GOOG already announced then that it would appeal the ruling. Whether GOOG's appeal is successful or not, the results of this case could take years to unfold.

• If GOOG ultimately loses the appeal, it seems unlikely that the DOJ will break the company into several smaller slices. This scenario would likely involve breaking out GOOG's primary businesses: Search, Android, and Cloud. It could also bring numerous other pieces into the picture, including YouTube, Chrome, and Gemini AI. However, the antitrust case centered on Google Search, ruling that GOOG spent billions to form an illegal monopoly to become the world's default search engine.
• In becoming the default search engine, GOOG spent up to $26 bln to ink deals with various companies. Around $20 bln was paid to Apple (AAPL) alone. The capital worked to fortify GOOG's positioning in the online search industry, with reports showing GOOG dominating around 90% of the market.
• While GOOG would likely be able to maintain its search engine as the default on its browser and devices, these contracts may be the focus of the DOJ. Just eliminating the AAPL contract, prompting iDevice and Mac users to choose a default search engine instead of having one already assigned, could go a long way to opening the doors for increased competition. AAPL's iPhone and iPad hold the top spot in their respective markets globally. However, it should be mentioned that GOOG remains the leader when including all Android-powered devices.

Still, a breakup cannot be entirely ruled out because of how expansive GOOG's reach is globally via Android and Chrome, with Search already the default option across these devices and the web browser. Furthermore, requiring users to select which search engine they prefer would likely result in a negligible loss of GOOG's search engine market share. Google Search has already been well-established among users who may not be willing to try something else just because they were prompted. Also, merely slapping GOOG, which generated over $300 bln in revenue last year, with a hefty fine would probably not produce the more competitive market the DOJ seeks.

Bottom line, while concerning, a breakup of GOOG is not a guarantee and is still years down the road. While the court's ruling last week will hang over GOOG for some time, quarterly results will likely have more bearing on the direction of the stock. AI remains the center of attention in the near term. Unless the demand for AI begins to fade or stagnate, GOOG is positioned to bounce back from its current pullback.