Google is confronted with a potential $10 billion lawsuit following a recent antitrust ruling from the European Union
Google is confronted with up to $10 billion in private lawsuits throughout Europe following a recent EU antitrust ruling that has sparked a wave of damages claims.
Google is encountering a fresh legal hurdle in Europe, with private damages claims potentially reaching $10 billion following years of regulatory scrutiny regarding alleged anticompetitive behavior by the tech giant.
The lawsuits, started by smaller competitors in different European countries, come after years of investigation by European authorities and follow Google’s first loss under the EU’s Digital Markets Act (DMA), which could encourage more businesses to ask for compensation.
The recent development comes after a $1 billion fine was levied against Google under the DMA for purportedly prioritizing its own services and limiting app developers from guiding users to more affordable purchasing alternatives outside of its Google Play app store.
Legal experts suggest that the ruling may motivate additional companies to seek damages.
“I believe this will initiate a new surge of legal actions,” stated Thomas Höppner, a partner at Geradin Partners, which provided counsel to the German price comparison platform Idealo in a market abuse case.
Höppner thinks that specialized search firms might seek compensation not just for breaking the DMA but also for past actions that violate Article 102 of the Treaty on the Functioning of the European Union, which prevents abusing a dominant market position.
Google dismissed the lawsuits, contending that they lack merit.
A Google spokesperson stated, “We firmly oppose these lawsuits, which companies initiate to seek financial gain instead of focusing on improving their own products.”
Alphabet, Google’s parent company, is increasing its investment in artificial intelligence, leading to the legal claims. The investment push has impacted its finances, with Alphabet reporting negative free cash flow in the second quarter for the first time since it went public.
The company is currently facing over €10.4 billion in EU antitrust fines that have been imposed over the last decade, as regulators persist in tightening their oversight of major technology firms.
Google’s legal issues trace back to 2008, when it started prominently featuring its comparison shopping service in search results. Competing price comparison websites reported that the practice significantly diminished their web traffic, resulting in complaints that triggered an investigation by the European Commission.
That investigation led to a €2.42 billion antitrust fine in 2017, a ruling that Google attempted to contest before Europe’s highest court last year without success.
Several companies have since sought damages claims stemming from that ruling.
In November, a Berlin court granted German comparison shopping platform Idealo €465 million ($528.9 million) in damages, marking one of the largest antitrust awards ever issued by a German court.
British comparison shopping site Foundem has persisted in its ongoing legal battle, while Swedish price comparison platform PriceRunner, supported by Klarna, initiated a multibillion-dollar lawsuit in 2022 following the rejection of Google’s appeal against the EU shopping decision.
UK-based price comparison website Kelkoo, which is pursuing billions of pounds in damages, stated that the recent DMA ruling bolsters its ongoing legal claims.
“We anticipate that these will be somewhat affected by the DMA decision, as it indicates that Google continues to self-reference even now,” stated Kelkoo Chief Executive Richard Stables in an interview with Reuters, further noting that the recent ruling provides other claimants with more robust grounds to pursue legal action.
Litigation financing firms are gearing up to support more claims.
Matej Pardo, Chief Operating Officer of litigation funder LitFin, which is backing two groups suing Google in Amsterdam over shopping auctions and aiming for over $1 billion collectively, stated that additional cases are already in preparation.
“Numerous claims are already being filed, and likely many more are in preparation,” he stated.
Google has received its fifth and sixth antitrust fines from European authorities, marking a significant which is an important milestoneny of the company. Last month, the company lost its appeal against a record €4.1 billion EU fine concerning its Android mobile operating system, following regulators’ findings that it had utilized the platform to suppress competition.
Marco Pescarmona, chairman of Moltiply Group and one of the complainants against Google, stated that while the DMA offers a robust legal framework, he raised concerns about the level of enforcement by regulators.
The DMA is an excellent piece of legislation. The defect might be that it’s so effective that they’re hesitant to use it,” he said.
Despite the increasing number of lawsuits, legal experts suggest that Google may still gain advantages from protracted court proceedings. The company may still contest the recent DMA fine, although appeals in competition cases frequently require years to resolve.
LitFin’s Pardo observed that nearly twenty years passed between the purported shopping search violations and the conclusion of Google’s appeals.
“By that time, they’ve already dominated numerous markets,” he stated, characterizing regulatory fines as “a cost of doing business” and cautioning that some cases might take as long as eight years to settle.
In a recent ruling, a Stockholm court in July mandated that Google pay around $1.97 billion, inclusive of interest, in the PriceRunner case. While Klarna expressed approval of the decision, its legal counsel, Pontus Scherp, indicated that the company does not anticipate receiving payment in the near future, as Google is likely to file an appeal.
“An appeal can be anticipated to last over a year, and possibly several years,” Scherp stated.
