Are Google’s High Legal Costs A Drag On Its Stock Vs. Peers? – Alphabet (NASDAQ:GOOG)

Google’s earnings looked good enough on Wednesday to see it outperform Meta Platforms (META) for the remainder of the week. But hidden in the earnings report was this little gem: Alphabet, best known as Google, GOOG is still facing an unrelenting onslaught of lawsuits from numerous countries. Could this be a serious headwind versus its rivals?

The company said that total operating expenses increased 20% in the second quarter to $26.1 billion. “The biggest driver of that was expenses for legal and other matters, which reflected the impact of a $1.4 billion charge related to a settlement in a legal case,” noted Anat Ashkenazi, senior vice president at Alphabet and Google during the earnings call on Thursday.  “Operating margin was flat year-on-year at 40.1%…partially offset by the legal charge,” he said.

Google’s 10-Q filing discloses a wide range of legal proceedings beginning with the European Commission’s (EC) 2017 lawsuit and resulting $3 billion fine and ending with two 2024 EC cases against it, where the company says they cannot even “estimate a possible loss.”

In the first quarter of the year, Google showed a 17% annualized increase in General and Administrative costs, with the second quarter rising a bit more. Legal risks to Google are now some of the worst facing Big Tech. They are losing cases, absorbing fines, and paying settlements.

The most recent major legal case Google lost is a federal antitrust ruling in April 2025, where U.S. District Judge Leonie Brinkema found that Google holds an illegal monopoly in two online advertising markets. The court ruled that Google violated U.S. antitrust laws by willfully acquiring and maintaining monopoly power over parts of the digital advertising ecosystem, specifically tying its ad server and ad exchange businesses in violation of the Sherman Act – the country’s premier economic fairness law.

That ruling was Google’s second significant antitrust loss in under a year. There are constant rumors flying of it being broken into pieces, though some say this will be good news for Google shareholders.

“Breakups often promise to unlock shareholder value in theory but fail in practice, this case appears to be an exception, one where real value could be realized,” Gene Munster, managing partner at Deepwater Asset Management, was quoted saying by well-known Google beat writer David Streitfeld at The New York Times on June 2.

Russia, Turkey, UK Follow EU With Google Lawsuits

Google lawsuits are trending in the wrong direction for Alphabet investors.

In their 10-Q, Google says that a case in Russia is unlikely to have a materially adverse effect on their bottom line, but the company still faces a staggering dispute against 17 Russian TV networks over the removal of their YouTube channels.  Alphabet owns YouTube.

The total amount of fines imposed on the company by Russia stands at approximately 46 billion rubles, or around $580 million.

Google has already paid around 25 billion rubles ($325 million) – 13 billion rubles ($163 million) reported by Russian news publishers Izvestiya and 7 billion rubles ($88 million) reported by the Interfax newswire, and 5 billion rubles ($63 million) more according to publicly available records.

Even though Google downplays this legal risk, the political environment in Russia makes it more uncertain. Courts have previously frozen billions in local assets of foreign companies. For instance, a Russian court froze $1 billion in local assets linked to UniCredit last year, as well as to Germany’s Deutsche Bank AG and Commerzbank AG.

Google is under increasing legal and regulatory scrutiny no matter where you look:

• Risk of $35 billion in other EU fines, with Google admitting it failed to resolve discord, Reuters reported on July 9.
• Google is likely to lose its appeal of the EU’s 4.3 billion euro Android fine (final ruling expected soon).
• A $314 million jury verdict in California over misused cell phone data.
• U.S. antitrust trial with Texas could lead to over $100 billion in potential penalties for ad tech unlawful dominance.
• New EU complaint from publishers over AI Overviews misusing web content.
• Additional “mammoth complaints” in the UK, Turkey and South Africa.

Google did not return a request for comment made Thursday during market hours.

Other countries are smelling blood in the water around Google. But there is good news for Alphabet.

Google is Loaded. But Meta Outperforms.

In 2024 alone, Google was fined nearly $2.9 billion (primarily from antitrust penalties), according to Proton’s tech fines tracker. Some examples include a $700 million settlement in late 2023 resolving an all-50-state antitrust lawsuit over Google’s Play Store practices, and a record $1.375 billion privacy settlement with Texas in 2025 for alleged unlawful data tracking. Google also settled a 40-state location-tracking case for $391.5 million in 2022, based on Proton’s tech fines tracker.

Despite billions in fines, Alphabet’s operating expenses can cover it. They had about $208 billion in operating expenses in 2022, then $223 billion in 2023 and rising slightly to $237.6 billion in 2024. This means Google’s legal payouts are on the order of 1% or less of its yearly operating costs.

Meanwhile, Meta’s legal expenses are also substantial, but its expense base is smaller than its Big Tech rival.

The largest recent hit was a $1.4 billion settlement with Texas, announced last year, over Facebook’s past use of facial recognition without consent. That was their largest-ever fine imposed by a state, and right around what Texas charged Google. 

In May 2023, the EU fined Meta 1.2 billion euros for violations in data transfers – the biggest fine under Europe’s digital security rules at the time. Google looks ready to double that payout to the EU, however, when considering the massive Android case alone.

Year to date, Meta is up 22% and Google is far behind, up under 2%.  Meta is up over 55% in the last 12 months, with Google up 11%. Google is also trailing far behind the Nasdaq, as measured by the Invesco Nasdaq Trust (QQQ) ETF.

For this reason, Google shares are cheaper than Meta. Google trades at forward price to earnings of 20.6 times while Meta investors will pay 27.9 times for a fairly similar product line, and a similar AI sidebar play. And less legal risk.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.