2 shareholder derivative actions against Google filed

Google Inc.'s parent company has been slapped with two derivative shareholder actions charging its board of directors with exposing the company to government enforcement and private actions relating to allegations of anti-competitive and monopolistic business practices.

"Google is exposed to potentially billions of dollars in liability from these private lawsuits, in addition to major regulatory actions that it faces," said the complaint filed by Alex M. Outwater of Scott+Scott Attorneys at Law LLP.

Outwater represents two plaintiffs in both actions: Bucks County Employees' Retirement System and Police and Fire Retirement System of the City of Detroit. The plaintiffs have held Alphabet common stock for years. The complaint were filed Friday and consolidated on Monday as: In re: Alphabet Inc. Shareholder Derivative Litigation 5:21-cv-09388 (N.D. Cal., filed Dec. 6, 2021).

The Detroit plaintiff's operative complaint states, "So far, Google has lost many early rulings in these actions. For example, in both the Northern District of California and Southern District of New York, the courts have ordered information from suits pending before them to be unsealed, thus forcing Google to reveal many aspects of its monopoly, including its market shares, fees, and numerous internal communications and presentations showing that Google executives knowingly pushed for anticompetitive conduct."

However, a Google statement sent by email on Tuesday, said, "Google competes fairly in a highly competitive industry where prices are free or falling and products are constantly improving. Alphabet has an experienced board and a robust set of committees that oversee the Company, including competition and regulatory matters. We look forward to pursuing our legal defenses in court."

The case has been assigned to U.S. District Judge Richard Seeborg of the Northern District of California in San Jose.

The individual defendants "have all exhibited a willingness to openly and actively flaunt antitrust laws in the past," Outwater's complaint stated. "Their roles as controlling stockholders and executives of the company are the primary driver of Alphabet's illegal business practices."

The complaint said Google has enjoyed a monopoly in general search services, general service text advertisements and general search advertising. Its next closest competitor is Bing, which has a 7% market share, compared to Google's collective market share of more than 85% in the United States, the complaint stated. Google cannot be beaten in terms of data that it gathers from users on its Google Chrome browser, Android devices and billions of Google accounts across the world, Outwater wrote.

He alleged Google is able to do so by securing exclusionary contracts that guarantee its products will be the only ones available in the vast majority of web browsers and mobile search apps.

Google spends billions per year, Outwater wrote, to maintain dominance through the execution of revenue sharing contracts with Apple and other web browsers and mobile carriers, as well as mobile phone makers, home device makers and car manufacturers.

The complaint noted that the U.S. Justice Department and 48 state attorneys general brought antitrust enforcement actions against the company and mentioned private lawsuits in many venues relating to advertising and the Google Play Store.

The plaintiffs seek fines against Google's directors if they are found to have violated antitrust laws; an order for Google to settle its other legal actions pertaining to antitrust claims; and appointment of a board of independent directors to oversee compliance and improve its practices.

Google is also facing a federal lawsuit filed by Epic Games over its business practices in the markets for mobile apps and payment processing within Android mobile apps. Epic seeks an injunction that would force Google to implement an open, competitive Android marketplace for all users and industry participants. Epic Games Inc. v. Google Inc. et al. 3:20-CV-05671 (N.D. Cal., filed Aug. 19, 2021).