Google Sued for $6.6 Billion: Did It Rig the Internet?

GuruFocus.com
04-16

Alphabet's Google (GOOGL) just got hit with a lawsuit that could cost up to 5 billion ($6.6 billion)and it's not coming from regulators this time. A massive UK class action claims Google weaponized its default search engine status to freeze out competitors and force British businesses to overpay for digital ads. Filed at the Competition Appeal Tribunal, the lawsuit says Google struck deals with Android phone makers and paid Apple (NASDAQ:AAPL) to make its search engine the default across devices, locking in market control and pushing ad prices higher than they should've been.

    Leading the charge is competition law expert Or Brook, who argues UK businesses had no real choice: if you wanted visibility online, you had to play by Google's rulesand pay up. The claim alleges that Google built a walled garden around search ads, where it not only dominated volume (over 90% of UK searches) but also offered enhanced functionality only through its own channels. Over 200,000 businesses are said to have been impacted. Brook didn't hold back: Google has been leveraging its dominance in the general search and search advertising market to overcharge advertisers.

    Google's response? Predictable. The company called the lawsuit speculative and opportunistic, and insists people use Google because it's helpfulnot because they're forced to. But the timing couldn't be worse. Britain's Competition and Markets Authority is already investigating Google's grip on digital ads, and the global antitrust spotlight on Big Tech is only getting brighter. If this legal fight gains momentum, it could mark a major turning point in how digital ad ecosystems are governedand priced.

    This article first appeared on GuruFocus.

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