Google is facing a new challenge on the legal front as a class-action lawsuit filed in the United Kingdom is seeking to make the company pay £7 billion for allegedly manipulating market dynamics to its advantage.
This new legal proceeding in Europe comes on the heels of a damming verdict in the United States where a federal judge categorized Google’s internet search business as a monopoly as it engaged in practices that created severe entry barriers for competitors and used the firm’s dominance of multiple ecosystems to press mobile manufacturers to pre-install its web browser.
Nikki Stopford, a consumer rights advocate and the founder of a non-profit called Consumer Voice, has built a meticulous case that goes beyond the traditional arguments brought up by regulators against the internet giant. Her lawsuit reveals the complex dynamics of Google’s ecosystem that allow it to manipulate search results, digital adverts, and other similar elements to benefit its interests.
The Competition Appeal Tribunal’s unanimous decision to allow the case to proceed signals a significant shift in regulators’ view of tech giants like Google and the US antitrust proceeding could have paved the way to this change of heart.
“This green light from the tribunal is a significant victory for UK consumers,” Stopford said.
The core argument of the lawsuit is that Google has systematically engineered its market position to eliminate any meaningful competition. By creating an interconnected web of commercial agreements, pre-installation requirements, and strategic partnerships, the company has effectively created an almost impenetrable barrier for potential competitors.
Google Maintains Its Search Dominance In 2 Main Ways
Stopford’s lawsuit claims that Google’s huge success is not the result of just a traditional product-market fit. Instead, the company has progressively orchestrated a strategic approach that sought to secure both technological and commercial superiority through unfair business practices.
The first mechanism that has allowed Google to achieve and maintain its dominance in the search market involves Android device manufacturers. Google has reportedly forced manufacturers to pre-install Google Search and Chrome browser applications as a prerequisite for accessing the lucrative Google Play app store.
This practice effectively eliminates consumer choice at the device selection stage, creating a default ecosystem that strongly favors Google’s services.
The second mechanism relates to the firm’s billion-dollar agreement with Apple. By paying approximately £1.2 billion in 2019 to be the default search engine on Safari’s iOS platform, Google (GOOG) has effectively purchased market dominance.
This financial arrangement creates a closed loop of digital access that leaves little room for alternative search providers to gain meaningful market share.
The statistical evidence supports Stopford’s allegations. Google currently processes 90% of all general search queries on the internet while the figure escalates to around 95% on mobile devices.
This level of market concentration is unprecedented in the digital technology sector and raises significant concerns about fair competition and consumer choice.
Luke Streatfeild, a Partner at the legal firm Hausfeld & Co LLP, which is spearheading the legal effort along Stopford, added: “This judgment is good news for UK consumers, as the case for compensation brought by our client on their behalf can now proceed to trial.”
Google is Facing Pressure from All Corners of the World to Change its Ways
The UK lawsuit is not an isolated incident as there seems to be a coordinated international regulatory response to Google’s monopolistic market practices. Regulatory bodies across multiple jurisdictions are examining and challenging the company’s business model simultaneously after the US judge’s ruling.
In the United States, the Department of Justice has taken an even more aggressive stance against the tech giant. The proposed remedies go beyond financial penalties as prosecutors are suggesting structural changes to Google’s operations.
The potential forced sale of the Chrome web browser and restrictions on how Android is commercialized to manufacturers would represent a fundamental challenge to the company’s integrated ecosystem.
The European Union has also been confronting Google’s market practices. The 2018 decision that resulted in a €4 billion fine established a critical legal precedent. The European Commission’s conclusion that Google’s search dominance “tends to harm, directly or indirectly, consumers” has become a foundational argument for subsequent legal challenges.
The UK’s Competition and Markets Authority (CMA) has further intensified its scrutiny of the firm by examining the revenue-sharing agreements that exist between Google and Apple (AAPL).
Their independent inquiry suggests that the mobile browser duopoly significantly constrains technological innovation and restricts consumer choice in the digital marketplace.
Google Users in the UK Could Get As Much as £100 Each from the Lawsuit
The class action is structured to include approximately 65 million UK residents aged 16 and over who have purchased goods or services from businesses that used Google’s search advertising services.
The estimated compensation for each of these individuals would be approximately £100 and represents more than a financial remedy – it would be a symbol of the justice system’s recognition of this ongoing systemic market manipulation and the damages that it inflicts on consumers.
Beyond the immediate financial implications, the lawsuit could trigger fundamental changes in how digital platforms operate. It challenges the prevailing model of “free” digital services that conceals the hidden costs of these offerings.
Detractors emphasize that Google offers a free service on the surface but demands consumers to give up their most sensitive data, get harassed by ads spread across the entire Google ecosystem, and obtain biased search results that favor businesses that pay the most to rank the highest on Google’s search result pages.
Financial penalties may not be as harmful to Google compared to the forced breakup of its empire. The sale of critical units like Chrome and changes in its traditional businesses practices may cause more financial damage than straightforward payouts.
In addition, alleviating and reducing entry barriers in the search market in key jurisdictions like the United Kingdom and the United States may affect Google’s dominance in what is the main source of revenue for its business.
Google Claims that Users Choose Its Services for Their Quality
Google’s defense strategy relies on portraying its market dominance as a result of superior technological innovation rather than enforcing anti-competitive practices. Paul Colpitts, Google UK’s senior counsel, argues that users choose Google for its quality and helpfulness, not due to a lack of alternatives.
He deemed the lawsuit as “speculative and opportunistic.”
However, the evidence presented in the lawsuit challenges this narrative. The company’s intricate web of commercial agreements, pre-installation requirements, and strategic partnerships suggests a more calculated approach to gaining full control of the search market.
“Google has been warned repeatedly by competition regulators. Yet it continues to rig the market to charge advertisers more, which raises the prices they charge consumers,” the head of Consumer Voice further stressed.
As this new legal proceeding unfolds, Google could be facing the most significant regulatory threat in its history, one that can only be compared to the antitrust proceeding that Microsoft (MSFT) went through decades ago that almost ended up with a breakup as well.
The outcome of these legal actions could establish new precedents for how digital platforms are regulated in these important countries and could result in severe financial challenges for the tech giant.