Google sued for £5bn in UK over allegations of shutting out rivals

Google is being sued in the UK for up to £5bn in damages over allegations it shut out rivals in the internet search market and abused this dominance to overcharge businesses for advertisements.

A class action filed at the competition appeal tribunal on Wednesday argues that the US company has taken actions that enable it to charge higher prices for the promotions that appear in search queries than it otherwise could in a fair market.

It is alleged that Google, which is owned by Alphabet, contracted phone makers to pre-install the Google search app and Chrome browser on Android devices and paid Apple to make it the default search engine on iPhones, with the intention of shutting out competition.

The claim is filed by a competition law expert, Or Brook, on behalf of thousands of businesses and alleges Google ensured its search engine had better functionality and more features for Google’s own advertising offering than that of its competitors.

A Google spokesperson said: “This is yet another speculative and opportunistic case and we will argue against it vigorously. Consumers and advertisers use Google because it is helpful, not because there are no alternatives.”

Brook said businesses had almost no choice but to use Google ads to advertise their products and services.

“Regulators around the world have described Google as a monopoly and securing a spot on Google’s top pages is essential for visibility,” she said in a statement. “Google has been leveraging its dominance in the general search and search advertising market to overcharge advertisers.”

The Competition and Markets Authority launched a UK investigation into Google’s search services in January, which is still ongoing, including into their impact on advertising markets. It said at the time that millions of people and businesses relied on Google’s services, which accounted for 90% of searches and were used by more than 200,000 UK businesses to advertise.

Google is facing several competition investigations and lawsuits around the world that relate to its digital advertising market dominance.

Since September, it has been embroiled in a second antitrust trial in the US over whether it has illegally monopolised the digital advertising industry, after losing a landmark case in August, which it is appealing against.

One Google ad executive quoted in the US government’s complaint compared the company’s business model to Goldman Sachs or Citibank owning the New York Stock Exchange.

A loss in that trial could force Google to break up parts of its business and divest some of its advertising technology, hitting its primary source of revenue. It would also have far-reaching implications for the wider tech industry and online publishers.

In March, the European Commission accused Google of breaking its competition rules for digital markets by prioritising search engine results that pointed to Alphabet’s own services over those of rivals, breaching the requirement to treat third-party services in a “transparent, fair and non-discriminatory” way.

Breaches of the EU’s Digital Markets Act can result in companies being fined 10% of worldwide revenue, or 20% if they reoffend.

Donald Trump has been seeking to press governments and institutions into dropping competition lawsuits against tech companies by indicating that he will factor any regulatory action against US companies into his decisions about imposing sweeping tariffs on foreign goods.

It emerged this month that the UK government was considering a reduction in the headline rate of its digital services tax – a 2% levy introduced in 2020 on the revenues of tech companies including Amazon, Google and Apple that raises about £800m a year – in an attempt to placate the US president.