On February 9, 2025, the European Commission opened so-called specification proceedings to ensure Google complies with the bloc’s Digital Markets Act (DMA). Over the next six months, Brussels will clarify how Alphabet must grant “equally effective access” to its Gemini AI services and Google Search data for rival AI developers and search engines. The proceedings stop short of a formal antitrust investigation but could lead to binding draft measures if Google is found to favor its own products. Failure to comply may result in fines up to 10% of Alphabet’s global revenues, underscoring heightened regulatory risk in Google’s core advertising and AI businesses.

Alphabet continues to leverage its lead in custom AI hardware and software. In 2025, the company expanded its fleet of Tensor Processing Units (TPUs) by 40% year-over-year and committed over $90 billion to capital expenditure—primarily for data centers supporting Gemini and Google Cloud. The March partnership with Apple to integrate Gemini into Siri offers potential incremental ad and cloud-service revenue, while Alphabet’s recent acquisition of Common Sense Machine enhances its 3D generative AI capabilities. Analysts project that AI-related segments could contribute up to 25% of Alphabet’s revenue by 2027, reinforcing its competitive moat in digital advertising and cloud infrastructure.

In January 2026, Google agreed to pay $68 million to settle a U.S. class-action lawsuit alleging its Assistant unlawfully recorded users’ private conversations and shared the data with third parties for targeted ads. Although Alphabet did not admit wrongdoing, the settlement underscores ongoing privacy and litigation risks, coming less than 18 months after a $1.4 billion data-privacy resolution in Texas. With several other suits pending—some seeking hundreds of millions in damages—increased legal expenses and potential reputational damage may pressure free cash flow, elevate compliance costs, and weigh on investor sentiment over the near term.