Google Faces UK Lawsuit Claim It Contributes To Cost Of Living Crisis

Alphabet’s Google has been hit with a multibillion-pound lawsuit, accusing the company of contributing to cost-of-living price rises

Google is once again facing legal action due to its leading position in the online advertising and search engine market, after a fresh lawsuit was filed against it.

A new multibillion-pound lawsuit on behalf of all UK consumers was filed against Alphabet Google with the Competition Appeal Tribunal, alleging its search engine domination came at the expense of consumers.

The class action lawsuit is seeking estimated compensation of £7.3bn and the lawsuit is being funded by Hereford Litigation, a global commercial litigation funder.

Class action lawsuit

Nikki Stopford, co-founder of Consumer Voice, a consumer rights campaigner is leading the claim and she instructed the law firm Hausfeld & Co. LLP to represent her.

Essentially the lawsuit alleges that Google closes out competition in mobile searches, and uses its market dominance to raise the prices paid by advertisers for their spot on the Google search page.

These price rises are then allegedly passed on to consumers.

In its announcement, Consumer Voice, accused Google of anti-competitive practices that have led to 65 million UK consumers allegedly paying more for goods and services.

“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,” said Nikki Stopford.

“Unfortunately, Google’s dominance of the search market has actually raised those prices for consumers,” said Stopford. “Despite judgements 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.”

Specifically, the Consumer Voice lawsuit argues that Google has effectively ‘bought’ the UK mobile phone search engine market.

It alleged that Google forced mobile phone handset manufacturers to pre-install the Google Search and Google Chrome browser apps on devices that use Google’s Android operating system in order to obtain a licence to use Google Play.

It also alleged that Google unlawfully paid billions to Apple to ensure that it was the default search engine on iPhones and other devices that used Apple’s iOS operating system.

It also claimed that Google has used its market dominance to effectively charge advertisers over the odds. Costs were then passed on to such an extent that all consumers ended up paying higher prices for goods and services sold by brands that have advertised on the platform, it is alleged.

“It’s a clear breach of competition law, for which consumers are paying the price,” said Stopford.

“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.”

Estimated compensation of £7.3bn has been requested by the action, for about 65 million UK users over the age of 16, meaning at least £100 per person on average.

Google response

A Google spokesperson was quoted by the Guardian newspaper as saying: “This case is speculative and opportunistic – we will argue against it vigorously.”

“People use Google because it is helpful. We only make money if ads are useful and relevant, as indicated by clicks – at a price that is set by a real-time auction.”

“Advertising plays a crucial role in helping people discover new businesses, new causes and new products,” the Google spokesperson concuded.

But Google is facing a number of similar challenges from regulators around the world.

Earlier this year, the US justice department and eight states filed lawsuits against Google over allegations that the company abused its dominance of the digital advertising business.

On this side of the pond, the UK’s Competition and Markets Authority (CMA) in May 2022 announced it was investigating Google’s dominance in advertising technology.

According to the CMA, in 2019, Google paid Apple approximately £1.2bn to ensure default status on Safari in the UK alone.

In June the European Commission (EC) warned Alphabet’s Google division of antitrust violations in its ad tech business, and stated it should be broken up.

Ambitious action

Meanwhile, Gareth Mills, Partner at Charles Russell Speechlys noted the ambitious position the lawsuit takes.

“This claim is the latest in a sequence of class actions raised before the UK CAT claiming for losses caused to third parties by Google’s alleged abuse of a dominant position in the field of online advertising, following two previous claims made in the last 9 months,” said Gareth Mills

“This claim sets out the ambitious position that this alleged action not only caused losses to online advertisers (who were forced to pay AdX’s high costs) but also to all UK consumers on the basis, it appears, that these costs were ‘passed on’”, said Mills.

“It is noteworthy that all these claims are being bankrolled by third party litigation funders and that Google will likely be keen to avoid a similarly adverse finding as that made in France,” said Mills.

“With eye-catching claim amounts and the involvement of third-party funders seeking a multiple return on investment in these class actions, it is likely that financial imperatives will be every bit as important to the parties as the exercise of competition law principles,” Mills added.

“The cases brought on behalf of the UK Advertiser themselves are far in advance of the latest ‘Consumers claim’ and the success of this latest claim will be predicated almost entirely on the legal and factual findings of the earlier complaints,” Mills concluded.