Alphabet-owned Google (GOOGL) is being hit with a £25 billion ($33 billion) legal claim that it abused its market dominance in online search advertising in the U.K. It left the stock flat in pre-market trading.
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Unfair Prices
The lawsuit filed at the Competition Appeal Tribunal accuses Google of anticompetitive practices through its agreements with mobile device manufacturers, which make Google Search the default search engine.
This, the lawsuit claims, has led to inflated prices for advertisers in the U.K.
It is estimated that between 500,000 and 1.5 million UK advertisers have been affected by Google’s actions, resulting in “excessive and unfair prices.”
The claim seeks compensation for all advertisers who paid Google for search advertising from 1 January 2011, with the total compensation potentially reaching £25 billion.
The claim argues that Google’s agreements with phone manufacturers and network operators to make Google’s search engine the default option on their products meant it has been able to maintain a significant degree of domination in the search market, and as a result charge higher prices.
Google Defense
The U.S. tech giant is already facing a similar £7 billion legal claim in the U.K. over its search advertising business.
Roger Kaye QC, who is leading the claim, said: “This case marks a significant step in re-establishing a fair and competitive landscape for all advertisers. Monopolizing the advertising space to the point of abuse cannot continue.”
A Google spokesperson said: “These types of meritless claims are brought by lawyers seeking profit and bring little-to-no benefit to those they represent. Consumers and advertisers use Google because it’s helpful, not because there are no alternatives.”
Google, alongside other U.S. tech titans, is coming under increased pressure in Europe over accusations about its competitive practices and market power.
Is GOOGL a Good Stock to Buy Now?
On TipRanks, GOOGL has a Strong Buy consensus based on 29 Buy and 9 Hold ratings. Its highest price target is $250. GOOGL stock’s consensus price target is $199.14 implying an 15.18% upside.
