Alphabet shares slid more than 4% on Tuesday after the European Union ordered Google to open up its Android operating system and Search data to competitors. The directive, issued under the Digital Markets Act, forces Google to grant rival AI assistants access to 11 Android features and share anonymized Search data with competing services. The news adds to mounting regulatory and financial pressure on the tech giant.
The EU's Digital Markets Act Order
The European Commission's order requires Google to make changes to Android that take effect with the next major version, due in July 2027. Separately, Google must begin sharing anonymized Search data with competitors starting in January 2027. Google has objected, citing privacy risks, trade secrets, and national security concerns. The EU could also slap Google with a fine next week in a related DMA investigation, though the amount hasn't been disclosed.
This isn't the only antitrust headache for Google. The U.S. Department of Justice is pursuing its own case over Google's search dominance, with litigation still ongoing.
Gemini 3.5 Pro Delay and AI Spending
Meanwhile, Alphabet's next flagship AI model, Gemini 3.5 Pro, is reportedly delayed. CEO Sundar Pichai had signaled a June release. The setback comes as the company pours massive sums into artificial intelligence. Alphabet has guided between $180 billion and $190 billion in capital spending for this year alone. That spending binge led to a reversal of its buyback strategy and an $80 billion equity raise, which Berkshire Hathaway helped anchor.
Wall Street still expects strong earnings: Alphabet's Q2 EPS is projected around $2.86, up nearly 24% year-over-year, with results due on July 22. Google Cloud, a bright spot, grew 63% last quarter to nearly $20 billion in revenue.
Warren Buffett's Stance on Alphabet
Warren Buffett's Berkshire Hathaway holds a stake in Alphabet worth over $31 billion, ranking behind only Apple and American Express among its holdings. But in a CNBC interview, Buffett said Alphabet is not among his four or five favorite Berkshire-owned businesses. He also flagged the capital intensity of AI spending, calling it “real money.” Buffett confirmed he personally built the position and that successor Greg Abel did not initiate the trade.
Buffett's lukewarm endorsement adds another layer of uncertainty for investors already wrestling with regulatory headwinds and ballooning costs.
Investors will watch the July 22 earnings call closely for updates on Google's AI roadmap and cloud growth. But the immediate focus is on the EU's next move: a possible fine next week in the DMA probe. With the Android changes years away and Search data sharing still three years out, Google has time to fight the order — but the clock is ticking on both sides of the Atlantic.
