Photo by AS Photography
Google is currently facing a class-action lawsuit in the UK amounting to $6.6 billion (5 billion pounds) due to allegations of exploiting its dominance in the online search sector to impose excessive charges on businesses for advertising.
The lawsuit, submitted on Wednesday to the UK’s Competition Appeal Tribunal, contends that Google leveraged its market influence to raise advertising fees for ads shown in its search results—expenses that, according to the claim, would be lower in a genuinely competitive environment.
What are the allegations in the lawsuit?
The lawsuit asserts that Google compelled mobile device manufacturers to pre-install its search application and Chrome browser on Android devices, enabling the company to impose “supra-competitive ad prices,” which inflate costs for search advertising and result in financial losses for businesses reliant on ad revenue. Additionally, the suit claims that Google paid Apple “billions of pounds” to establish itself as the default search engine on Safari.
The legal action has been initiated by competition law expert Or Brook, representing thousands of businesses, and argues that Google has tailored its search engine to offer enhanced functionality and features for its own advertising services, overshadowing those of its competitors. “Currently, UK businesses and organizations, regardless of size, have little choice but to utilize Google ads to promote their products and services,” Brook stated. She noted that regulators globally have labeled Google a monopoly, emphasizing that achieving a prominent position on Google’s search results is crucial for visibility.
Google’s response to the lawsuit
In response, Google characterized the lawsuit as “yet another speculative and opportunistic case,” indicating its intention to “vigorously contest it.” A spokesperson for the company remarked, “Consumers and advertisers choose Google because it is beneficial, not due to a lack of alternatives.”
A market analysis conducted in 2020 by the Competition and Markets Authority (CMA), the regulatory body overseeing competition in the UK, revealed that Google accounted for 90 percent of the total revenue generated in the search advertising sector.
Challenges for Google and Meta
This marks the latest legal obstacle for the search engine leader. In recent years, major technology companies, including Google and Meta, have encountered a series of lawsuits and regulatory scrutiny due to concerns regarding their significant power and influence.
In 2018, the European Union imposed a fine of 4.3 billion euros (approximately $4.9 billion) on Google for abusing its dominant market position with the Android operating system by mandating that smartphone manufacturers pre-install Chrome and Search alongside its Play app store. Seven years later, Google is still contesting this antitrust ruling. Additionally, this week, a significant antitrust lawsuit initiated by the Federal Trade Commission against Meta commenced in court, potentially leading to the requirement for the social media giant to divest its Instagram and WhatsApp services.
