Google has been fined $1 billion for violating the European Union’s Digital Markets Act (DMA). This is the first time the EU has fined Google under this law, and it could potentially trigger a new wave of damage compensation lawsuits against Google in Europe, with potential claims reaching up to $10 billion.
According to Reuters, Google is currently facing lawsuits from smaller competitors in various countries, with more cases in preparation. The penalty against Google, announced by the EU on July 22, focuses on two violations: Google’s bias towards its own products in search services, and hindering app developers from directing users to options outside of Google Play that may have lower prices.
Lawyers say that the EU’s determination of Google’s ongoing violations may encourage more companies to take legal action against the tech giant. Thomas Hoppner, partner at Geradin Partners, which provided legal advice to the German price comparison platform Idealo, stated that this could spark a new wave of lawsuits.
In response to collective claims from competitors, Google released a statement asserting that the lawsuits have no legal basis. A Google spokesperson also indicated that the opponents are seeking compensation through legal means rather than investing resources in product innovation.
However, this legal battle is undoubtedly a blow to Google. Alphabet, Google’s parent company, is making significant investments to compete in the global AI race, resulting in negative free cash flow for the first time since the company went public.
Over the past decade, Google has faced a total of €10.4 billion in antitrust fines led by the EU. Now, with the EU’s intervention under the DMA, this tech giant could face even more severe financial and legal challenges in Europe.
Several of the compensation cases stem from disputes over Google’s shopping comparison service. Google has prioritized displaying its own comparison service in search results since 2008, leading to a significant drop in traffic for competitor websites, prompting complaints and an EU investigation. In 2017, the EU fined Google €2.42 billion, a decision upheld last year by the European Court of Justice.
Current lawsuits include Kelkoo, a UK price comparison website, seeking billions of pounds in compensation from Google. Richard Stables, CEO of Kelkoo, stated that the recent DMA ruling shows that Google is still prioritizing its own services, providing further grounds for other companies to file claims.
In Germany, a Berlin court ruled last November that Google must pay Idealo €465 million in compensation, marking the highest amount awarded by a German court for antitrust violations.
In Sweden, a Stockholm court in July ordered Google to pay approximately $1.97 billion to the price comparison website PriceRunner, supported by the financial technology company Klarna.
Italy’s Moltiply Group is seeking €2.97 billion in compensation from Google. The group operates the price comparison website Trovaprezzi.it.
Additionally, LitFin, a litigation financing company, is backing two groups in Amsterdam to sue Google over the shopping advertising auction mechanism, with total claims exceeding $1 billion.
Lawyers point out that due to potential delays in the appeals process, time could work in Google’s favor. Google may still challenge the fine imposed under the DMA.
In the Google Shopping case, from the alleged violations to exhausting all appeal avenues, the process is expected to last close to 20 years.
Matej Pardo, CEO of LitFin, describes these fines as potentially just “operating costs” for Google, and notes that waiting times for some cases could be as long as eight years.
Pontus Scherp, legal advisor at Klarna, mentioned that the appeal process for the PriceRunner case is expected to exceed a year and may likely continue for many years.