The lawsuit alleges that the search engine hindered competition, leading to an increase in consumers’ cost of living
Google is currently grappling with a fresh multibillion-pound lawsuit brought forth by UK consumers, who allege that the company played a role in exacerbating the increase in the cost of living.
Representing every consumer in the UK, this lawsuit asserts that Google’s actions have suppressed competition within the search engine sector, resulting in price hikes throughout the UK economy.
Lodged with the Competition Appeal Tribunal, the lawsuit contends that Google has violated competition laws and heightened the cost of living for all UK consumers.
Google stands accused of excluding competitors in the realm of mobile searches and leveraging its market dominance to inflate the fees charged to advertisers for ad placements on the Google search page. The repercussions of these actions are ultimately felt by consumers.
Hereford Litigation, a worldwide provider of financial support for commercial litigation, is financing the class action. Nikki Stopford, co-founder of Consumer Voice, a consumer advocacy group, serves as the class representative in this legal action and stated, ‘This lawsuit intends to restore fairness, not only by seeking compensation for individuals but also by holding Google accountable for its conduct.’
The lawsuit is seeking an estimated £7.3 billion in compensation for approximately 65 million UK users aged 16 and above, translating to an average of at least £100 per person.
Earlier this year, the US Department of Justice and eight states initiated legal actions against Google, alleging that the company had exploited its dominant position in the digital advertising industry.
Furthermore, the Competition and Markets Authority (CMA) in the UK has launched an investigation into whether Google has engaged in anti-competitive practices within the ad tech sector.
According to the CMA, in 2019, Google made a payment of approximately £1.2 billion to Apple to secure default status on Safari in the UK.
The lawsuit against Google asserts that the company has excessively filled its search pages with paid advertisements, putting pressure on businesses to increase their spending on ‘clicks’ rather than relying on organic user discovery of their websites. The lawsuit contends that a more competitive search engine would prioritize ad relevance to users rather than the price paid by advertisers.
The lawsuit alleges that the business arrangements between Google and Apple, which ensured Google’s status as the default search engine in the Safari browser bundled with iOS, Apple’s iPhone operating system, played a role in preserving Google’s dominant position in the mobile search market.
In 2022, Google Ads generated over $224 billion in revenue, constituting nearly 80% of Alphabet’s total revenue, which amounted to $283 billion in the same year.
Stopford stated, “Google has strategically positioned itself, sometimes in violation of the law, as the default search engine on nearly all mobile devices in the UK. It leveraged its dominant market position to charge advertisers more than they would in a competitive market, such as for the sponsored links displayed when users conduct searches on Google. Advertisers, in turn, have inevitably transferred these increased costs to consumers.”
Luke Streatfeild, a partner at the legal firm Hausfeld leading the litigation, commented, “Google offers a valuable service, but it’s not without cost. This claim asserts that Google has stifled competition in the search engine sector for years, negatively impacting businesses that rely on its services, and ultimately, consumers. The absence of competition leads to higher prices and lower quality, with these effects rippling through the entire UK economy.”
A spokesperson from Google responded, saying, “This lawsuit is speculative and opportunistic, and we will vigorously contest it. People choose Google because it is helpful. We only generate revenue when ads are beneficial and relevant, determined by clicks at prices set through real-time auctions.
