Google Accused of Fueling Inflation

Google faces a legal claim demanding more than $9 billion for allegedly contributing to inflation. It's fair to say the claim is somewhat ambitious.

The claim has been filed in the United Kingdom by Hereford Litigation, which describes itself as a "third-party litigation funder." It's filed a claim with the Competition Appeal Tribunal, which hears cases that specifically relate to alleged breaches of competition law.

Technically the claim is on behalf of every person aged over 16 in the UK, meaning the demand is for around $140 per person. If the claim was successful, it's not obvious how the money could be effectively distributed to the entire population without being eaten up in processing costs.

Advertisers Pass On Higher Costs

The basics of the claim are simple enough, if a significant stretch. The claimants argue that Google acts unfairly to maintain its dominance of the search engine market, particularly on mobile devices. It points to Google making a deal with Apple to be the default search engine in the Safari browser on iOS. (Source: independent.co.uk)

In turn, the claim argues, Google is able to charge higher fees to advertisers, who then pass on the extra costs to consumers through higher prices.

One of the specific arguments in the claim is that Google intentionally devotes too much of the search results page to paid advertising rather than the links its algorithm calculates as most relevant. It argues this puts undue pressure on website owners to pay for ads rather than rely on topping the rankings "naturally."

Google Says It Helps Users

The claim also argues that Google puts too much weight on how much advertisers are willing to pay for the top slot rather than how relevant the ads are to the user's search query. It says this shows Google doesn't face enough competition from other search tools that might force it to pay more attention to the needs of users.

Google says it will "vigorously" defend the claim: "People use Google because it is helpful. We only make money if ads are useful and relevant, as indicated by clicks - at a price that is set by a real-time auction." (Source: theguardian.com)

What's Your Opinion?

Does the claim have any validity? How much of Google's dominance is down to it offering the best service and how much is because of other factors? If you usually use Google for search, what would make you switch away to a competitor?