Shares of Alphabet (GOOGL) took a hit recently as the tech giant responded to the European Union’s $3.4 billion fine. The core issue? The EU believes Google is abusing its AdTech business. Google says it won't divest, offering "tweaks" instead. But let's dig into what this really means.

The Proposed "Tweaks"

Google proposes letting publishers and advertisers using Google Ad Manager set different minimum prices for different bidders. They're also talking about increasing interoperability. The claim is that this gives everyone more choice and flexibility. But is it a genuine fix, or just clever maneuvering?

The EU's competition chief, Teresa Ribera, suggested selling parts of the business to resolve the conflict of interest. Google's response? That a breakup would "harm the thousands of European publishers and advertisers who use Google to grow their business.” It’s a classic defense: framing a move that protects their bottom line as being in everyone else’s best interest.

Here's where I get skeptical. Google's argument hinges on the idea that its current structure is essential for European businesses. But if that structure is inherently anti-competitive, as the EU alleges, then those businesses are benefiting from an unfair advantage. Are they genuinely growing, or just growing because Google is tilting the playing field?

Pelosi's Portfolio and the AI Arms Race

It's worth noting that GOOGL remains a favorite on Wall Street, with a Strong Buy consensus. Analysts project a potential 12% upside from current levels. And then there's Nancy Pelosi, whose portfolio includes a hefty chunk of Alphabet stock (around 15%). Her recent GOOGL call options are up over 46%. (Yes, I know it's technically her husband's trades, but let’s be real.) Nancy Pelosi Is Retiring up 595%, but She’s Still Holding on to These 3 Stocks (Yes, I know it's technically her husband's trades, but let’s be real.)

Meanwhile, Alphabet is knee-deep in the AI arms race. Capital expenditure guidance is up to $91–93 billion, focused on data centers and AI chips. Revenue for Q3 2025 hit $102.3 billion, a 16% year-on-year increase. Google Cloud revenue jumped by about 30%—to be more exact, 35%, beating expectations.

But here's the rub: a German court recently ordered Google to pay roughly €573 million ($666 million) in antitrust damages to two price-comparison sites. And the EU isn't backing down. They’re launching formal proceedings to assess whether Google applies fair conditions to publishers on Google Search. The potential fine? Up to 10% of Alphabet's worldwide turnover. Last year, that was $385.5 billion. So, we're talking about a potential $38.5 billion fine.

That's a lot of money, even for Google. Is it enough to change their behavior?

The Gemini Privacy Lawsuit: A Growing Headwind

And it doesn't stop there. Google is facing a privacy lawsuit over its Gemini AI assistant. The claim is that Google secretly activated Gemini for all users of Gmail, Chat, and Meet, using it to monitor and collect private communications to train AI models. Buried opt-out options made it hard for users to disable it.

This is the part of the report that I find genuinely puzzling. Google is betting big on AI, but they’re simultaneously facing increasing scrutiny over how they collect and use data. It’s a fundamental conflict. Are they so confident in their legal defenses that they're willing to risk these lawsuits, or are they simply underestimating the potential backlash?

The company is also rolling out new AI shopping features, like conversational shopping in "AI Mode" and store-calling via Duplex + Gemini. But anything that automates purchases and calls stores on users’ behalf also increases the scrutiny on how Google’s AI handles data and consent.

Playing the Long Game, Or Just Stalling?

Google's strategy seems to be one of incremental concessions. They offer small changes, fight the big battles in court, and hope that the regulatory pressure eventually eases. But the EU isn't the only threat. The US Department of Justice has a similar case working its way through the courts. And the German court’s decision shows that EU antitrust findings can translate into costly civil litigation for years.

So, is Google's EU gambit a smoke screen or a real shift? The data suggests it’s a bit of both. They’re willing to make minor adjustments to appease regulators, but they’re not about to fundamentally alter their business model without a fight. And with a market cap north of $3 trillion, they have the resources to fight for a very long time.

Is This Just a Cost of Doing Business?

The core question isn't whether Google is making changes, but whether those changes are meaningful. Are they truly addressing the underlying conflicts of interest, or are they simply rearranging the deck chairs on the Titanic? The EU seems determined to find out. And with potential fines in the tens of billions of dollars, the stakes are higher than ever.

The Data Says: Proceed With Caution