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Google hit with £13.6bn class action lawsuit

google
google

Google has been hit with a £13.6bn lawsuit over claims the tech giant’s stranglehold on the online advertising market has deprived publishers of revenue.

The class action lawsuit, filed in the Competition Appeals Tribunal on Wednesday, claims that Google raked in “super profits” at the expense of hundreds of thousands of websites and mobile apps in the UK.

The claim is being brought on behalf of 130,000 businesses that carry online banner advertising, ranging from newspapers and magazines to special interest blogs.

A Google spokesman said the company will fight the claim "vigorously".

The publishing industry has suffered a steady decline in advertising revenues amid a shift to online readership, while Google and Facebook have emerged as dominant forces in the market.

Economic analysis conducted for the claim estimates that Google’s dominance may have reduced advertising revenue by up to 40pc for some publishers.

The total loss for all publishers dating back to 2014 is estimated to be £13.6bn, although the mid-range for the claim is expected to be between £5bn and £7bn.

Google has already come under scrutiny from regulators over its control of the online advertising market, which is estimated at up to 90pc.

Last year the tech giant was fined €220m (£190m) by French competition authorities, and it is facing similar investigations in the UK and US.

Toby Starr, a partner at City law firm Humphries Kerstetter, which is representing the claimants, said: “Google’s misconduct in this matter is well known and multiple investigations are underway across the globe.

“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. The only way to recoup these losses is through a competition class action.”

The lawsuit is centred on allegations that Google’s ad exchange, which runs online auctions for advertising placements, has been used to distort competition.

It is understood the claim will argue that Google’s dominant position on both sides of the market have allowed it to unfairly favour its own services and blocked out rivals.

This has pushed down prices for publishers’ ad inventory and allowed Google to rake in lucrative commissions, according to the claimants.

A Google spokesman said: “Google works constructively with publishers across Europe – our advertising tools, and those of our many adtech competitors, help millions of websites and apps fund their content, and enable businesses of all sizes to effectively reach new customers.

“These services adapt and evolve in partnership with those same publishers.”

Claudio Pollack, a former director of Ofcom, is acting as class representative on the claim, which will cover all publishers in the UK unless they decide to opt out.

He said: “The marketplace for online advertising is sophisticated, technical and highly automated. Unfortunately, it is now well established that this market has developed in a way that is primarily serving Google.”

The UK lawsuit is being run in parallel with a similar multi-billion-euro claim in the Netherlands, which is expected to be filed early next year.