Report from Reuters
In Brief – Google and a collection of plaintiffs in shareholder derivative litigation alleging leadership wrongdoing that exposed the company to antitrust liabilities have agreed on a settlement that will have the company invest $500 million over ten years to enhance its antitrust legal and regulatory compliance efforts and establish a new board committee for risk and compliance. The lawsuits, filed in 2021, parallel the antitrust challenges involving Google’s search, AdTech, Android, and app distribution businesses in numerous markets globally. In the settlement, Google does not agree that it has committed wrongdoing, the shareholders will not receive direct financial compensation, and the plaintiff’s lawyers plan to seek up to $80 million for legal fees and expenses. The settlement must be approved by US District Judge Lita Rin.
Context – The EU began its first investigation of Google search, which became the Google Shopping case, in 2010. The European Commission ended up bringing and winning three cases, and their efforts to police Google was a key impetus for the EU Digital Markets Act. The US Federal Trade Commission began a similar investigation in 2011, declined in 2013 to challenge Google, but the company remained a major target of the US “techlash” and the Department of Justice (DoJ) eventually filed major antitrust lawsuits in 2020 and 2023. Google also lost an antitrust lawsuit filed by Epic Games. A remotely comprehensive list of Google’s global antitrust challenges is too long to include here. A shareholder derivative lawsuit aims to force changes in corporate practices rather than directly compensate shareholders. Given the 10x growth in Google’s market cap since 2010, it makes sense that shareholder litigation is not claiming direct losses. However, Google antitrust setbacks are certain to result in other follow-on litigation. For example, the company is facing at over €12 billion in damages claims from dozens of price comparison websites across Europe just as a follow-on to their loss in the Shopping case. Yelp is pursuing similar follow-on litigation in the US following the DoJ’s recent win in its search-focused antitrust case.