Google is currently facing legal action to the tune of up to €25bn (£21.6bn) due to allegations of depriving newspapers and internet bloggers of significant advertising revenues. The tech giant is subject to class action lawsuits both in the UK and the Netherlands, with claims stating that Google’s advertising technology unfairly marginalized publishers while retaining the lion’s share of ad revenues.
This claim represents all websites and publishers featuring online banner advertising, including newspapers, magazines, blogs, and other digital media platforms. Toby Starr, a partner at the law firm Humphries Kerstetter, estimates that potential UK victims may have lost up to £7bn in revenues since 2014. He highlights that this not only affects national news websites but also the countless small business owners who rely on advertising revenue generated by their fishing websites, food blogs, football fanzines, and other online content they have spent time creating.
This issue is particularly detrimental to newspapers, as their advertising revenues have suffered greatly due to Google’s rise, resulting in the collapse of brand advertising and classified ad sales over the past two decades. Google and Facebook now dominate the digital advertising market, controlling over 70% of online ads.
Law firms Geradin Partners and Humphries Kerstetter plan to bring these claims before the Competition Appeal Tribunal in the UK and a court in the Netherlands. They will apply for class action status for the claims, which could potentially result in publishers being owed billions of euros. The case will be presented by a representative on behalf of thousands of online publishers.
The crux of the claim revolves around allegations that Google’s ad exchange, its online ad auction technology, was used to distort competition and favor its own advertising publishing service. This unfair practice allowed Google to secure a greater proportion of internet ad revenues than it should have, according to the claimants.
A spokesperson for Google stated that the company collaborates positively with publishers across Europe. Their advertising tools, along with those of their many adtech competitors, support numerous websites and apps in funding their content while enabling businesses of all sizes to effectively reach new customers. They also emphasized that these services adapt and evolve in partnership with publishers. Google dismisses the current lawsuit as speculative and opportunistic, expressing readiness to vigorously defend against it when the complaint is received.
In 2020, French competition authorities fined Google €220m for its advertising conduct. Meanwhile, the Competition and Markets Authority in the UK has initiated an investigation into whether Google’s advertising business has violated competition laws.
Litigation funders Harbour are backing the new claim brought by Geradin Partners and Humphries Kerstetter. Litigation funders have been injecting millions of pounds into class action cases against Big Tech firms in the UK.
Vannin Capital, a Jersey-based company, has allocated an £11m fund for a £920m competition claim against Google, which alleges unlawful excessive fees on payments made through its app store. Google denies the claims. Vannin is financing the claim through an £11.3m loan agreement with its parent company, SoftBank-owned private equity firm Fortress.
The increase in investors willing to support high-stakes legal claims has led to a surge in new class action lawsuits in the UK. According to data from law firm RPC, British litigation funding firms have doubled their assets over the past three years and now possess £2.2bn in cash for backing claims.
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