The UK’s Competition Appeal Tribunal (CAT) has ruled that a class action lawsuit accusing Google of anti-competitive practices can proceed.
The suit was originally filed in November 2022 by Ad Tech Collective Action LLP, which argues that the Chocolate Factory’s dominant position in the online advertising industry has harmed British websites and apps that show ads.
“We allege that Google has breached competition law, which prohibits companies from abusing a dominant position,” Ad Tech says on its website. “The claim alleges that all UK-based publishers of websites and apps … that received revenue from the sale of online display ads may have suffered financial losses due to Google’s practice and are entitled to compensation.”
“Compensation should reflect the higher ad sales revenues which you should have earned if Google had not acted in breach of competition law,” Ad Tech argues. The suit seeks £13.6 billion ($17.39 billion) in damages.
Google attempted to nip the case in the bud by asking the CAT to dismiss it, arguing that Ad Tech’s claims were “misconceived” because it didn’t offer precise enough counterfactuals to satisfy what is termed the Microsoft test.
Counterfactuals describe a hypothetical world where something didn’t happen, in this case what would have happened if Google hadn’t allegedly engaged in anti-competitive behavior. Since counterfactuals are important in determining financial damage, Google argued that Ad Tech’s suit fails due to a lack of detail and accuracy in the counterfactual scenarios, meaning it doesn’t pass the Microsoft test.
Unfortunately for the search giant, the CAT was not convinced.
“We accept the Claim Form could have more explicitly explained the relevant counterfactual(s),” the CAT said in its latest filing [PDF]. “However, having regard to our comments in the paragraph above, we consider the PCR’s counterfactual to have been sufficiently pleaded for Google to know the case it has to meet.”
The court also pointed out that Google proposed a threshold so high that it would have required Ad Tech to model the online ad industry with an unrealistic level of accuracy. Tribunal President Marcus Smith even grilled Google’s main lawyer over this issue, saying that while the counterfactual model Ad Tech provided wasn’t perfect, it worked well enough and that it could be refined at trial.
“The Microsoft test is not a barrier to access to justice,” the CAT states. “The general rule – in collective proceedings as in the case of individual claims – is that arguable claims ought to proceed to trial.”
Google also grumbled about the timeframe of claims made by Ad Tech, saying damages suffered from January 2014 to September 2015 were too old to be pursued, and that a complaint filed in March 2023 came after the initial filing in November 2022. The court said this was a matter that should be settled at the main trial.
The Chocolate Factory’s last effort to get the suit thrown out was to say that the class of plaintiffs, which are publishers and publisher partners, had a conflict of interest, but the CAT disagreed and said Google could do something about it at trial.
Yet another lawsuit for Google’s legal team to handle
While it isn’t unusual for an international corporation to be mired in some lawsuit in some part of the world, so far this year Google has seen an extreme amount of litigation in several countries specifically over its advertising practices.
Across the pond, Google is being sued by the US Department of Justice and 18 other states for creating an illegal monopoly, and has lately tried to avoid a jury trial by offering to pay for damages. Up north, Canada expanded its four-year probe of Google’s advertising operations.
On the other side of the world, Google was dragged into a European suit seeking €2.1 billion ($2.29 billion), while in Japan the ad biz only got a slap on the wrist for anti-competitive actions against Yahoo Japan. However, even in Japan Google is on thin ice, and could face consequences if it doesn’t clean up its act. ®