Lawsuits, ad infinitum
Google is facing multiple court battles in several countries, the latest being by a group of British website publishers who allege the US tech giant – and its parent Alphabet – abuse their dominant position in online advertising, depriving them of revenue.
The class action claim was filed at the Competition Appeal tribunal on behalf of 130,000 businesses publishing around 1.75 million website and apps in the UK, law firms Humphries Kerstetter and Geradin Partners said in a statement.
The claim says Google is an effective monopoly and has a vantage point of total control for digital advertising, earning “super-profits for itself” at the expense of its small but numerous businesses it has as clients.
Commercial web of intrigue
This is not out of the blue, Google has faced legal wrangles for years. While most commonly known for its search engine, Google’s main business is online advertising. Alphabet reported $257 billion in revenue for 2021.
Created in 2015, Alphabet is essentially a holding company for Google, which generates nearly all of its revenue and profit. Google has always portrayed itself as a tech company and has invested in many far-reaching areas of technology — such as internet search, phones, artificial intelligence, self-driving cars and health technology.
The wider picture
Online advertising in general has been investigated by regulators in Britain, the European Union and the United States, and a 150 million euro fine imposed on Google by France’s antitrust watchdog was upheld earlier this year.
Toby Starr, a partner at Humphries Kerstetter which is leading the claim, said multiple investigations into Google’s advertising practices were under way.
“However, none of these regulatory actions will do anything to compensate the UK publishers of thousands of websites and mobile apps who have lost billions in advertising revenue because of Google’s actions,” he told Reuters.
The British action is in parallel with an EU claim that is expected to be filed in the Netherlands next year, the law firms said. It also has faced antitrust lawsuits in the USA from the American Department of Justice, as recently as this summer.
The law firms said economic analysis produced for the claim suggested that Google’s action may have reduced advertising revenue by up to 40% for some companies, and the total loss to the businesses from 2014 to date was estimated at up to 13.6 billion pounds ($16.33 billion).
What will Google do next?
The company has pledged to split parts of its ad-tech business into a separate company, under Alphabet, to head off fitter investigations.
Such a move would keep the online advertising arm under the Alphabet umbrella but still represent a significant change in the digital advertising landscape, in which Google is a huge player on both sides of the ecosystem.
Google has hives off other aspects of ots ooretains, like its self-driving car company Waymo and its life sciences company Verily, while keeping them under the Alphabet umbrella.
Our take
Google has been a pioneer in online advertising since the 10s. Over time, it has engineered and adapted a raft of ad-tech avenues that allow businesses to grow and let ad buyers seek out the audience they want on Google Search, YouTube, Maps and across the internet.
But potential damages from the UK suit could run into the low tens of billions, according to lawyers in the case. The British saga would brighten the spotlight on the tech company it already faces in the EU – all of which could cost the company a vast sum.
So while a Google spokesman said the lawsuit was speculative and opportunistic”, it also seems to be making deals and offers to stave off potentially massive fines. That could mean tech investors see chances in any new subsidiaries, while contemplating the security of the leader in the online as world.