U.S. Court Mandates Major Changes to Google’s Business Practices

A U.S. federal judge imposed significant new restrictions on Google this past Friday. The rulings, handed down by Judge Amit Mehta, prohibit the Alphabet subsidiary from bundling its Gemini AI software with other services and will force the company to renegotiate its multi-billion dollar search distribution deals on an annual basis. This legal development has the potential to fundamentally reshape the competitive landscape of the artificial intelligence sector.

The court's decision, dated December 5, introduces two pivotal changes. The first prevents Google from tying its Gemini AI platform to the licensing of its other products, such as Google Maps or the Play Store. The court aims to stop Alphabet from leveraging its established dominance in mobile services to gain an unfair advantage in the burgeoning AI market, a move seen as particularly critical with the recent launch of its advanced Gemini 3 models.

Perhaps more consequential is the second mandate: all agreements that establish Google as a default search engine, including its landmark deal with Apple, must now be limited to a maximum one-year term. This replaces the multi-year contracts that have long secured Google's prime digital real estate. The new "hard sunset" provision means the tech giant must effectively re-bid for these valuable placements every year. This regular opening creates recurring opportunities for rivals like Microsoft and could substantially increase Google's costs of securing traffic.

Legal Context and Strategic Implications

These injunctions stem from the landmark August 2024 verdict that found Google guilty of maintaining an illegal monopoly in web search. The timing presents a strategic challenge. Alphabet just unveiled its Gemini 3 model in November 2025 to compete with offerings from OpenAI and Anthropic. Now, the success of its AI will depend more on its technical merits rather than the guaranteed distribution once provided by pre-installed placements.

Should investors sell immediately? Or is it worth buying Alphabet?

Market observers suggest that Google's superior technology and substantial financial resources will likely allow it to prevail in open annual auctions. However, its Traffic Acquisition Costs (TAC) are expected to rise noticeably, which may pressure the company's profit margins.

Market Reaction and Future Outlook

Wall Street's response has been muted. Pivotal Research reaffirmed its "Buy" rating on Alphabet stock on Friday, citing the company's robust cloud computing and advertising foundations. The consensus price target remains near $312. Shares closed Friday's session at $318.39, holding close to a 52-week high of 279.70 euros (converted) and representing an approximate 66% gain since the start of the year.

The true test will come in 2026. The first round of renegotiations under the new rules will reveal whether Google can maintain its market position without the security of long-term contracts. The company is considered likely to appeal the ruling, meaning legal uncertainty will persist for the foreseeable future.