Coordinated legal action could have a structural impact on the future of online advertising and pricing
Trade
Image: Bernd von Jutrczenka via dpa
Google risks a mass claim that could exceed $218 billion (€201 billion), according to news website Bloomberg. Dozens of advertisers are jointly launching an arbitration procedure against the technology company. They are taking this step after federal judges ruled in 2024 that the group is unlawfully exploiting its dominant market power.
Two different federal courts ruled in 2024 that Google is guilty of illegal monopolisation. A court in Washington found that the company unlawfully dominates the online search market. The company is appealing this decision. Another judge also ruled that Google is monopolising advertising technology by bundling its services into Google Ad Manager.
This allows the company to apply artificial minimum prices in ad auctions and to block competitors. In a recent corporate filing, Google indicated that it will vigorously defend itself against the outstanding damage claims.
Advertisers’ contracts with the technology company contain a mandatory arbitration clause. In practice, this mechanism prevents conventional class actions through the ordinary courts, often forcing advertisers to go individually to an arbitrator. Despite that barrier, dozens of companies are now uniting in a mass claim in order to pack more of a punch.
In practice, 25 or more claims against the same company are combined in a coordinated procedure. This increases the financial pressure on the company and raises the likelihood of a substantial settlement. In addition, major publishers such as USA Today and Advance Publications are already seeking individual compensation for lost advertising revenues.
The current mass claim is being handled by a law firm that has previously brought successful cases against large corporations. According to calculations by an independent economist, the claims could exceed 218 billion dollars (201 billion euros). This action shows that the legal tactics of big tech companies can backfire on them.
Companies have been enforcing such clauses for decades to keep litigation costs down. Moreover, this case is setting an important precedent for online advertising and the rates that go with it. Such arbitration procedures typically last 12 to 24 months before a final resolution is reached.
Business AM