TechDogs-"Hausfeld: Google faces New multibillion-pound Lawsuit From UK consumers for stifling competition in the search engine market, causing price rises across the UK economy"

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Hausfeld: Google faces New multibillion-pound Lawsuit From UK consumers for stifling competition in the search engine market, causing price rises across the UK economy

By Business Wire

Business Wire
Overall Rating
  • Claims Google shut out competition in mobile search, raising prices for advertisers, with consumers ultimately paying the cost
  • Estimated damages worth approximately £7 billion - piling pressure on Google as its longstanding search advertising model faces unprecedented technological and regulatory challenges
  • Google accused of anti-competitive practices by effectively forcing handset manufacturers to pre-install Google search and browser apps on Android devices
  • Company also accused of unlawfully paying billions to Apple to ensure that Google was the default search engine on Apple phones
  • These unlawful practices have already incurred complaints, censure and adverse rulings from regulators in the European Union, United States and UK, and Europe’s largest ever fine for breach of competition law

LONDON--(BUSINESS WIRE)--#BigTech--The extent of Google’s alleged abuse of its market dominance in mobile search advertising has become clear today in a new claim filed at the UK court demanding compensation for effectively every consumer in the country.

The claim seeks approximately £7bn in redress on behalf of UK consumers from Google for breaches of competition law in shutting out competition in mobile search. Google uses its market dominance to raise the prices paid by advertisers for prominence on the Google search page, according to the claim. Those increased prices are systematically passed on to consumers, who are charged higher prices for the goods and services they buy.

Google’s role in driving prices higher has happened by stealth, but is finally laid bare in the legal claim. It is believed that practically every consumer in the country has been hit in the pocket by the tech giant’s dominance, because of Google’s importance as an advertising platform for goods and services.

Google is accused of crowding its search pages with paid advertising - pressuring companies to pay more for “clicks”, rather than depend on consumers finding their sites organically. Google’s auction system also gives undue prominence to the highest-paying advertisers, rather than prioritising quality – to the further detriment of consumers. Google Ads generated over $224 billion in revenue in 2022, accounting for almost 80% of parent company Alphabet’s revenue ($283 billion in 2022).

These alleged acts of price manipulation by Google are possible because Google is set as the default search engine account for at least 94% of the mobile device sector, by usage1. The legal claim argues that in a more competitive market for search, a search engine would tend to focus on maximizing quality, leading to a higher proportion of free organic results. A more competitive search engine would also select ads based more on relevance to the user than price paid by the advertiser.

The case will today be filed at the UK Competition Appeal Tribunal by Nikki Stopford, a UK-based consumer champion with 25 years’ experience advocating and raising industry standards for consumers. Ms Stopford is seeking to be the court-authorised “class representative” to lead the litigation on behalf of all affected consumers. She is represented by Hausfeld.

The case against Google

The first alleged infringement, regarding Android devices, follows on from the 2018 Android Decision of the European Commission (and subsequent confirmation in the General Court in 2022) which found that Google had abused its dominant position in tying Search with other apps and services. In particular, smart phone manufacturers have been required to install Google Search and Chrome browser apps in order to be able to obtain a licence from Google to use its Google Play store and streaming service.

The second alleged infringement relates to commercial agreements between Google and Apple to ensure Google was the default search engine for the Safari browser preinstalled with iOS (the operating system used on Apple’s iPhones). According to the UK Competition and Markets Authority (“CMA”), In 2019, Google paid Apple approximately £1.2bn to ensure default status on Safari in the UK alone,

A complaint by the Department of Justice and several Attorneys General in the US in January 2021, as well as recent findings by the CMA in the UK, support the claim that Google’s commercial agreement with Apple foreclosed the market for search on iOS devices.

The claim alleges that these conducts have enabled Google to maintain and strengthen its dominant position on search on mobile and act as what the CMA describes as a “barrier to expansion for other search engines.”

Taken together, the consumer damages are estimated to be worth approximately £7 billion.

Who is eligible to be part of the claim?

The claim is on behalf of all UK consumers aged 16 years or over who have paid increased prices for goods and services from advertisers as a result of the actions of Google.

All that is necessary is that you purchased goods and/or services from a business selling in the UK which used search advertising services provided by Google. It is not necessary for you to have seen the goods or services advertised on Google, or used Google to purchase the goods or services. This is because the claim says that these higher prices affected all of a business’ products if it advertised on Google.

Those who are interested in finding out more about the claim and signing up for regular updates should visit www.searchclaim.co.uk.

About the class representative

Nikki Stopford brings 25 years of experience in advocating and raising industry standards for consumers. She co-founded Consumer Voice and is the Chair of the British Standards Institute (BSI) Consumer Forum, also representing consumers’ interests on the BSI’s Standards Policy and Strategy Committee. She has held executive leadership roles running successful digital and content-led consumer-facing businesses that have engaged and advocated for millions of consumers. For more than 10 years, Ms Stopford was Group Director of Research and Publishing at Which? – the UK's largest consumer organization. She was also COO Officer at Resolver, a well-known technology, data and digital business operating in consumer complaints and dispute resolution markets.

Nikki Stopford, the class representative in the action, said:

“Almost everybody uses Google as their go-to search engine, often trusting the company to help them find the best products and services at reasonable prices. Unfortunately, Google’s dominance of the search market has actually raised those prices for consumers. Despite judgments at the highest levels in Europe and complaints in the US, Google continues to rig the search market so that it can charge advertisers more.

“It’s a clear breach of competition law, for which consumers are paying the price. Google has been warned about its behaviour by competition regulators repeatedly but has taken no meaningful action to stop the abuse. This action aims to make the company accountable for its repeated lawbreaking and get consumers back the money they’re owed.”

Luke Streatfeild, Partner at legal firm Hausfeld & Co LLP, who is leading the litigation, said:

“Google provides a great service, but it isn’t free. Instead, this claim says that Google has choked off competition in search engines for years, to the detriment of the businesses that use its services – and, ultimately, consumers. The lack of competition leads to higher prices and poorer quality, and the effects of this are felt throughout the UK economy. We represent Nikki Stopford in bringing this action, to promote healthier competition in digital markets, and compensation for UK consumers for the losses they have suffered because of Google’s breaches of competition law.”

Further Information

Affected claimants, on whose behalf the class action is brought, will not pay costs or fees to participate in this legal action, which is being funded by Hereford Litigation, a global commercial litigation funder. The action is insured, which means that class members have no adverse cost risk in relation to the claim.

Hausfeld has instructed Daniel Jowell KC and Colin West KC of Brick Court Chambers, and Mehdi Baiou and Andrew Lomas of One Essex Court.

Notes for Editors

About Hausfeld & Co LLP:

Hausfeld is a leading disputes-only law firm specialising in competition law, with significant expertise in all aspects of collective redress and group claims, including abuse of dominance litigation against Big Tech and other large corporates. The firm pioneered the Trucks Cartel litigation in the UK, Germany and the Netherlands and has acted on some of the most complex damages claims of the last decade: on the “Interchange Fee” litigation against Visa and Mastercard; against six financial institutions over their participation in unlawful price-fixing of the foreign exchange currency markets; and against Google, Apple, Amazon and Qualcomm in relation to alleged anti-competitive behaviour in a wide range of abuse of dominance actions. Click here for more info on Hausfeld’s collective redress practice.

1. CMA Digital Advertising Final Report, Appendix H, para 12.

Contacts

Media enquiries
Palatine Communications - Conal Walsh / Victoria Fell / Joshua Wolff
SearchClaim@palatine-media.com

First published on Thu, Sep 7, 2023

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