Alphabet’s Google (GOOG) is under pressure from two different court cases that could reshape parts of its business. One case targets how the company runs its app store, while the other focuses on the way its search engine uses artificial intelligence. In the meantime, GOOG shares have climbed a modest 0.25% on Friday, but have lost 0.20% in after-hours trading. Still, shares are up 27% year-to-date.
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App Store Reforms
Let’s begin with Google’s app store, Google Play. A United States appeals court has denied the company’s request to pause a ruling that orders the company to change the way its Play Store works. The case was brought by Epic Games, the maker of Fortnite. A jury found last year that Google had limited competition in how users access apps on Android phones.
As a result, the order now requires Google to allow users to download rival app stores inside the Play Store. It also requires the Play Store catalog to be open to competitors. In addition, Google must permit more payment options inside apps, and it cannot pay phone makers to keep the Play Store as the only choice. Some of these changes must be in place within 30 days, while others have up to 10 months.
Google has argued that the order will harm user safety and privacy, and the company may ask the United States Supreme Court to step in. For investors, the ruling highlights the risk that Google may lose control over how apps are sold and how revenue is shared.
AI in Search
At the same time, Google is also facing new lawsuits from media firms over its use of AI in search results. Penske Media, which owns Billboard, Variety, and Rolling Stone, has filed a lawsuit claiming that Google’s AI Overviews are using the publications’ data for its AI summaries, on the one hand, while cutting into site visits and ad sales on the other. The company claims that about 20% of Google search results that link to its sites now include AI summaries, and that share is rising. Penske also stated that revenue from online shopping links dropped more than one-third since the end of 2024.
Only recently, Anthropic settled a copyright breach lawsuit after claims that it had illegally downloaded over 7 million books for its AI training. Additionally, Perplexity is embroiled in legal disputes over copyright infringement, being sued by three Japanese companies for copying and reproducing their news reports without permission.
Other publishers and online firms, including Chegg (CHGG) and a local paper in Arkansas, have filed similar lawsuits. Google has responded that AI Overviews give users more choice and still send traffic to sites, adding that the clicks are of higher quality since users stay longer.
What It Means
Together, these cases show how Google is being challenged on both its app and search models. The Play Store order could reduce revenue from app sales, while the AI suits question how Google’s new features may impact web traffic and partner earnings. Although both cases will take time to resolve, investors will be watching how these outcomes may shift Google’s growth path.
Is GOOG Stock a Buy?
On the Street, Google scores a Strong Buy consensus, with an average GOOG stock price target of $235.42. This implies a 2.47% downside from the current price.
