A federal judge has ruled that thousands of lawsuits alleging Alphabet's YouTube platform causes addictive behavior and harms users, especially younger users, can move forward. The ruling opens the door to a potentially drawn-out legal battle for the tech giant, which also saw its free cash flow turn negative in the second quarter due to heavy AI investments. Historical precedent suggests major corporations often absorb such legal costs over time, as seen with the 1998 Master Settlement Agreement involving 46 U.S. states and major tobacco companies. Alphabet trades at 17.4 times forward earnings, slightly below the 17.7 average for communication services stocks, and remains a leader in internet search, streaming, and cloud computing.
Alphabet Inc Class CJudge allows thousands of lawsuits alleging YouTube causes addictive behavior to proceed, posing legal risk.
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