Will The Revival of the Adwords Suit Spell Disaster for Google or Simply Raise Prices for Your Firm?

Fight Evil words on a to do list written on a dry erase board to remind you to protect other people, improve safety and security and be a force for good over bad powers

Fight Evil words on a to do list written on a dry erase board to remind you to protect other people, improve safety and security and be a force for good over bad powers

Advertisers that had placed their trust in Google took another step towards challenging the tech supergiant last month. A group of ad companies and individuals that had paid for Google Adwords services have banded together to sue Google after it was revealed that much of their money went to advertising on dead sites. Together, they attempted a class action lawsuit before being struck down in district court with the help of Google’s phenomenal lawyers, who are probably the best in the world at liability avoidance.

But unfortunately for Google and stockholders such as myself, after a fresh look, the Ninth Circuit Court has agreed to allow the case to go forward as a class action suit. The original suit was filed in July 2008 after it was discovered that ads paid for between July 2004 and March 2008 were displayed on parked sites and error pages. The suit alleges that Google knew that such actions had taken place and allowed it to happen.

The plaintiffs in 2011 decided to move for class certification. Now the plaintiffs include a major drug and personal injury firm that felt it was taken advantage of. Google has claimed that their cases individually cannot be combined into a class action suit. This jives with many previous legal arguments by Google, especially after concern about a possible monopoly increased sharply over the last decade. This also comes as the Washington Post reports, Google’s new parent company Alphabet ditched its famous “Don’t be evil” pledge.

The Ninth Circuit’s decision will allow the case to proceed, and it is still unclear how it will play out. Google has invested much in attempting to swat down this case, understanding that it could be on the hook for millions in advertising revenue in a span of over a decade. (In other words, look for Google to go to paid local search or some other new algo change to make up for the shortfall) Furthermore, Google’s reputation as a premier advertising agency could be shaken by any negative ruling. But I doubt it.

There is still a long way to go, and the plaintiffs are ready for a long slog ahead. American courts have tended to favor Google in similar cases, even as European courts believe that it is an emerging monopoly. The door may now be opened for others that felt shortchanged by the Adwords program to step forward with suits of their own. We’ve written about Google before and about possible implications of its rapid growth. Check back for more information as this case and others develop.

Posts by Michael Ehline

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