Google is facing an $8.8bn lawsuit (£7 billion) legal action due to its leading position in the digital advertising and search engine market, after a fresh lawsuit was filed against the online tech giant, owned by Alphabet. Google has been accused of breaching competition law by shutting out mobile search competition and using its market dominance to increase the prices paid by advertisers for their prominence on the Google search page.
Google is facing a new $8.8bn lawsuit in Britain, which accuses the US tech giant of stifling competition in the search engine market and causing prices to rise across the UK economy.
In a lawsuit filed on Thursday with the UK Competition Appeal Tribunal, the consumer is seeking around £7 billion ($8.7 billion) in damages on behalf of effectively every consumer in the country.
It accuses Google of breaching competition law by shutting out mobile search competition and using its market dominance to increase the prices paid by advertisers for their prominence on the Google search page.
These costs are then passed on to consumers, who are charged more for the goods and services they buy, according to the claim.
Google faces new $8.8bn lawsuit on behalf of all UK consumers, accused of contributing to cost-of-living price rises
Alphabet’s Google has been hit with a multibillion-pound lawsuit, accusing the company of contributing to cost-of-living price rises
The new $8.8bn lawsuit on behalf of all UK consumers was filed against Alphabet Google with the Competition Appeal Tribunal, alleging its search engine domination came at the expense of consumers.
The class action lawsuit is seeking estimated compensation of £7.3bn and the lawsuit is being funded by Hereford Litigation, a global commercial litigation funder.
The lawsuit argues that Google abused its dominant position by tying its Search with other apps and services such as requiring smartphone manufacturers to pre-install Google Search and Google Chrome browser apps to obtain a licence to use the Google Play store app.
It also says Google paid Apple to ensure Google was the default search engine for the Safari browser on Apple devices such as iPhones.
Nikki Stopford, a consumer rights campaigner and the class representative in the action, said: “It’s a clear breach of competition law, for which consumers are paying the price.
“Google has been warned about its behaviour by competition regulators repeatedly but has taken no meaningful action to stop the abuse.
“This action aims to make the company accountable for its repeated lawbreaking and get consumers back the money they’re owed.”
According to consumer rights group Consumer Voice, the claim is made on behalf of 65 million UK consumers, who may be owed around £100 in compensation each if the lawsuit is successful.
A Google spokesperson called the case “speculative and opportunistic” and said the company “will argue against it vigorously”.
“People use Google because it is helpful. We only make money if ads are useful and relevant, as indicated by clicks at a price that is set by a real-time auction,” Google said.
“Advertising plays a crucial role in helping people discover new businesses, new causes and new products,” Google added.
Lawsuits have previously been filed against Google claiming billions in compensation for publishers in lost revenue from advertising Google and other US tech giants have also faced investigations from US, British and EU regulators in recent years as authorities crack down on their business practices.
Britain’s Competition and Markets Authority (CMA) regulator is investigating suspected anti-competitive conduct by Google through its ad tech practices.
Class action lawsuit
Nikki Stopford, co-founder of Consumer Voice, a consumer rights campaigner is leading the claim and she instructed the law firm Hausfeld & Co. LLP to represent her.
Essentially the lawsuit alleges that Google closes out competition in mobile searches, and uses its market dominance to raise the prices paid by advertisers for their spot on the Google search page.
These price rises are then allegedly passed on to consumers.
In its announcement, Consumer Voice, accused Google of anti-competitive practices that have led to 65 million UK consumers allegedly paying more for goods and services.
“Almost everybody uses Google as their go-to search engine, often trusting the company to help them find the best products and services at reasonable prices,” said Nikki Stopford.
“Unfortunately, Google’s dominance of the search market has actually raised those prices for consumers,” said Stopford. “Despite judgements at the highest levels in Europe and complaints in the US, Google continues to rig the search market so that it can charge advertisers more.”
Specifically, the Consumer Voice lawsuit argues that Google has effectively ‘bought’ the UK mobile phone search engine market.
It alleged that Google forced mobile phone handset manufacturers to pre-install the Google Search and Google Chrome browser apps on devices that use Google’s Android operating system in order to obtain a licence to use Google Play.
It also alleged that Google unlawfully paid billions to Apple to ensure that it was the default search engine on iPhones and other devices that used Apple’s iOS operating system.
It also claimed that Google has used its market dominance to effectively charge advertisers over the odds. Costs were then passed on to such an extent that all consumers ended up paying higher prices for goods and services sold by brands that have advertised on the platform, it is alleged.
“It’s a clear breach of competition law, for which consumers are paying the price,” said Stopford.
“Google has been warned about its behaviour by competition regulators repeatedly but has taken no meaningful action to stop the abuse. This action aims to make the company accountable for its repeated lawbreaking and get consumers back the money they’re owed.”
Estimated compensation of £7.3bn has been requested by the action, for about 65 million UK users over the age of 16, meaning at least £100 per person on average.
Google response to the $8.8bn Lawsuit
A Google spokesperson was quoted by the Guardian newspaper as saying: “This case is speculative and opportunistic – we will argue against it vigorously.”
“People use Google because it is helpful. We only make money if ads are useful and relevant, as indicated by clicks – at a price that is set by a real-time auction.”
“Advertising plays a crucial role in helping people discover new businesses, new causes and new products,” the Google spokesperson concuded.