Publishing Class-Action Cases Spells Trouble Ahead for Google in UK, EU

U.K. newspapers have this week been reporting that the law firm Humphries Kerstetter is planning to bring a class action case against Google in the next month, with a similar lawsuit being filed in parallel by lawyers in the EU.

The allegations against Google will be familiar to followers of the tech giant’s antitrust woes in the U.S., where the state attorney general office in Texas has been in protracted legal battles with Google since it first launched an investigation in 2020.

More on this: States Allege Google, Facebook CEOs Colluded in Online Ad Sales

That investigation threw light on the shady deal Alphabet made with Meta known as Jedi Blue, and is likely to have contributed toward decisions in the EU and the UK to launch similar probes this year.

Digital advertising is extraordinarily complex but the fundamentals are pretty easy to grasp. Websites possessing a few square inches of digital real estate need to match with advertisers willing to pay for the space. But publishers rarely negotiate directly with advertisers. Instead, intermediaries known as ad exchanges sit between buyers and sellers to match supply with demand.

The accusation against the current system is that Google has set itself up as buyer, seller, and marketplace, and is able to extract value from the whole process at each step of the way, often muscling out competitor services and driving prices up or down to increase its own profits.

In one notorious email unearthed by Texas investigators, a Google employee wrote that: “the analogy would be if Goldman or Citibank owned the New York Stock Exchange.”

Related: DOJ Eyes Antitrust Case Against Google, Report Says

In theory, instantaneous communication and rapid payment automation mean that digital advertising should operate as a near-perfect free market. In practice, the revelations of recent years show that publishers and advertisers have often been getting the short end of the stick.

The latest EU and UK lawsuits are hoping to claw back some of that money and the respective claims will be brought on behalf of website publishers that receive advertising revenue through Google’s platforms.

The U.K. claim will be “opt-out”, meaning that affected parties will be automatically included as part of the claim, while the EU claim lodged in the Netherlands will be “opt-in”, meaning would-be claimants will have to apply to join the suit.

With so many websites running their advertising operations through Google, thousands of businesses may be eligible for compensation, which lawyers have estimated could amount to $25 billion in total.

In parallel to civil action, competition watchdogs in both the UK and the EU are currently investigating Google’s AdTech business, in probes that may lead to further billions in fines for the company.

Read more: UK, EU Launch Parallel Antitrust Probes Into Google-Meta Ad Deal

Of central concern to both investigations is Jedi Blue, the backroom deal Google’s parent company Alphabet made with Facebook-owner Meta.

Describing the rationale behind its investigation, the U.K. Competition and Markets Authority (CMA) stated that “we’re concerned that Google may have teamed up with Meta to put obstacles in the way of competitors who provide important online display advertising services to publishers.”

Google should certainly be concerned about the regulatory scrutiny. Just this week it had its appeal against a $4.33 billion antitrust fine struck down by an EU judge. And although the search giant was able to win a small reduction, the fine is still the largest of three the European Commission has issued against Alphabet.

Read on: Google’s Appeal of EU’s Record Fine Nets 5% Reduction

Not to mention the fact that class action litigations can end up being much more expensive, considering the Volkswagen “deiselgate” scandal, for example, which has cost the German carmaker upwards of $30 billion in settlements.

Overall, regulators are right to intervene when monopolies arise, but for the consumers and small businesses that end up paying the price of giant corporations’ market dominance, nothing could taste as sweet as court-ordered cash settlements.

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