Google faces £7 billion UK class action lawsuit over search engine dominance

Company accused of abusing dominance in search engine market to inflate advertising costs

Google is facing another major legal challenge, this time in the UK, as a £7 billion class action lawsuit against the tech giant is set to proceed to trial.

On Monday, the UK's Competition Appeal Tribunal (CAT) rejected Google's request to dismiss the case, officially certifying it for trial.

Filed in September 2023 by consumer rights advocate Nikki Stopford, the lawsuit accuses the tech giant of leveraging its dominant position in the search engine market to inflate advertising costs, which are ultimately passed on to consumers.

It further accuses the company of engaging in anti-competitive practices, including compelling Android phone manufacturers to pre-install Google Search and Chrome and paying Apple billions to secure its position as the default search engine on iPhones.

All UK consumers aged 16 and over who have purchased goods or services from businesses using Google's search advertising services are automatically included in the class action unless they choose to opt out.

In 2022, Google Ads generated over $224 billion in revenue, comprising nearly 80% of parent company Alphabet's total revenue of $283 billion.

"This green light from the tribunal is a significant victory for UK consumers," Ms Stopford said.

"Almost everybody uses Google as their go-to search engine, trusting it to deliver quality results at no cost. But its service isn't genuinely free because its dominance has resulted in increased costs for consumers."

"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."

Google has firmly denied the allegations, asserting that the claims are without merit. In September, the company attempted to have the lawsuit dismissed.

"We still believe this case is speculative and opportunistic - we will argue against it vigorously," said Paul Colpitts, Google UK's senior counsel.

"People use Google because it is helpful; not because there are no alternatives."

CAT's decision comes at a time when Google is already facing intense scrutiny from regulators worldwide.

Just last week, the US Department of Justice (DOJ) proposed significant measures to curtail Google's dominance in the search engine market. The proposed measures include selling its Chrome browser and imposing strict limitations on Android.

The DOJ argues that Google's control over search distribution and its preferential treatment on platforms like Apple’s iPhone create insurmountable barriers for competitors.

Central to the DOJ's concerns is Google's ability to pay exorbitant fees to secure its position as the default search engine, effectively stifling competition. The department asserts that selling Chrome would permanently sever Google's control over a critical access point for search, creating a more level playing field for rival search engines.

The DOJ's action followed a court ruling in August that found Google guilty of anti-competitive practices.

Google is also facing other lawsuits from companies like Epic Games and Yelp. Last year, the company agreed to pay $700m to settle one antitrust action in US.