⚠ The Default Deals FallModerate threat

Alphabet (Google) (GOOGL) — threat to the moat

The payments survived the ruling and the exclusivity did not — the default is still bought, just no longer guaranteed.

The sharpest structural threat to Google's distribution is that courts may simply ban the default-placement deals. A US court found that Google's payments to be the pre-set search engine — most importantly on the world's most valuable smartphones — constitute unlawful monopoly maintenance1. The remedy, handed down in September 2025, did not ban the payments; it banned exclusivity, so a partner Google pays may now promote rival search engines alongside it2, under a final judgment that runs for six years3. The deals survived; their guarantee did not.

What the search judgment did to the default dealsPaying for default placementStill allowedExclusive default contractsBannedSearch index and user dataShared with qualified rivalsLength of the judgmentSix years, from Dec 2025StatusGoogle appealed; DOJ cross-appealedU.S. v. Google (D.D.C.): remedies opinion Sept 2, 2025; final judgment Dec 5, 2025
The deals did not fall — they lost their exclusivity. Google can still pay to be the default; partners can now promote rivals beside it.

This is dangerous because defaults are worth so much precisely because so few people change them. If Google can no longer pay to be the pre-set choice, some share of those billions of one-tap searches would be up for grabs at exactly the moment AI rivals are eager to seize the entry point — and even a modest slice of default traffic redirected to a competitor would be an enormous prize and an enormous loss. It strikes the distribution moat at its most valuable joint.

What tempers the danger is that many users would likely choose Google anyway, out of genuine preference and two decades of habit — the deals guarantee the default, but Google's product might well win the choice even in a fair fight. Google will litigate and appeal for years, and losing the payments would also save it the enormous sums it spends on them, softening the financial blow even as it opens the door to rivals.

This one ran high while a ban on the payments was possible; the judgment that arrived was milder, so it now rates moderate. The risk has not vanished — Google has appealed and the government has cross-appealed4, and a non-exclusive default is an open door for AI rivals just as the entry point to search is contested for the first time in twenty years. The number to watch is traffic acquisition costs, $59.9 billion in 20255: rising payments with steady search share would mean the deals still buy what they used to.

References
  1. ReportedThe August 2024 ruling found the default payments to be unlawful monopoly maintenance.
    United States v. Google LLC (D.D.C., Judge Mehta) — DOJ case page: Aug 2024 liability ruling (default-search payments, about $20B a year largely to Apple, found to be unlawful monopoly maintenance); final judgment and memorandum opinion Dec 5, 2025; the United States' response and opening brief on cross-appeal, July 28, 2026 — Liability ruling Aug 2024; final judgment Dec 5, 2025; appeals 2026 · publ. 2024–2026 · source ↗
  2. ReportedThe September 2025 remedy banned exclusive distribution deals rather than the payments, freeing partners to feature rival search engines.
    Hughes Hubbard, 'Court Issues Remedies Ruling in United States v. Google Search Case' (Sept 3, 2025) — Judge Mehta's 230-page remedies ruling: no forced divestiture of Chrome or Android ('the complete divestiture of Chrome is a poor fit for this case'); payments for default placement not banned but exclusive search distribution deals prohibited; search index and user-interaction data (not ads data) to be shared with qualified competitors at marginal cost — Remedies ruling of September 2, 2025 · publ. September 3, 2025 · source ↗
  3. ReportedThe final judgment of December 5, 2025 imposes remedies for six years.
    PPC Land, 'Google files appeal challenging six-year search remedies' — Judge Mehta entered final judgment on December 5, 2025, imposing six-year behavioural remedies (data sharing, syndication, Technical Committee oversight); Google filed its notice of appeal on January 16, 2026 — December 2025 - January 2026 · publ. January 2026 · source ↗
  4. ReportedGoogle has appealed and the government has cross-appealed (DOJ opening brief on cross-appeal, July 28, 2026).
    United States v. Google LLC (D.D.C., Judge Mehta) — DOJ case page: Aug 2024 liability ruling (default-search payments, about $20B a year largely to Apple, found to be unlawful monopoly maintenance); final judgment and memorandum opinion Dec 5, 2025; the United States' response and opening brief on cross-appeal, July 28, 2026 — Liability ruling Aug 2024; final judgment Dec 5, 2025; appeals 2026 · publ. 2024–2026 · source ↗
  5. ReportedTraffic acquisition costs were $59.9B in 2025.
    Alphabet Form 10-K, FY2025 — cost of revenues table: TAC $54,900 million (2024) and $59,926 million (2025), TAC rate down from 20.7% to 20.3%; cash flow statement: purchases of property and equipment $32,251m (2023), $52,535m (2024) and $91,447m (2025); Google Network revenues $30,359m (2024) and $29,792m (2025) — FY2025 (year ended December 31, 2025) · publ. February 5, 2026 · source ↗
Sources
Generated September 16, 2026