Google pays $100M to settle class-action lawsuit over advertising practices – News

Google LLC has agreed to pay $100 million to settle a class-action lawsuit that was filed in 2011 by customers of its AdWords advertising service.

Reuters reported the development today, citing documents submitted to a federal court in San Jose, California, late Thursday. The proposed settlement will have to be approved by a judge before going into effect.

The litigation began in March 2011 when a user sued Google over AdWords, the advertising service now known as Google Ads. The service allows companies to display promotions in the company’s search engine and third-party websites. The case revolved around two AdWords features that were available from the start of 2004 through December 13, 2012.

The first feature was known as Smart Pricing. In some cases, it gave companies a discount on ad space they purchased through AdWords. The size of the markdown depended on the likelihood that a click on an ad led to a sale or another outcome specified by the advertiser.

The plaintiffs argued that Google failed to deliver some of the Smart Pricing discounts it had promised to customers. The search giant, the lawsuit claimed, was contractually obligated to deliver the price cuts because of an agreement it had signed with AdWords users when they signed up. The agreement didn’t specifically mention Smart Pricing.

The other focus of the lawsuit was a feature that allowed marketers to limit the reach of AdWords ads to specific locations. According to the plaintiffs, Google sometimes displayed ads to users outside the specified locations. The complaint alleged that this practice breached California competition laws.

During the time frame covered by the lawsuit, AdWords determined users’ locations based on their IP addresses. The service also took into account a second factor: consumers’ search history. As a result, a user who entered a query such as “Seattle restaurants” but was located outside Seattle might have received AdWords ads set to only show up for consumers in the city.

The litigation lasted for more than a decade partly because there was a significant amount of evidence to analyze. According to court documents, the plaintiffs requested more than 910,000 pages of documents from Google along with several terabytes of click data.

“This case was about ad product features we changed over a decade ago and we’re pleased it’s resolved,” a Google spokesperson told Reuters.

The case’s conclusion comes about a year after the search giant settled another class-action lawsuit. That complaint focused on Chrome’s Incognito mode. To end the litigation, Google agreed to delete or anonymize billions of data points collected about users.

Photo: Unsplash