Justin Sullivan / Getty Images
Google CEO Sundar Pichai.
- Google is now fighting four class-action lawsuits filed on behalf of website publishers and advertisers who use its AdX services.
- Damages could run into tens or hundreds of millions of pounds, if the suits succeed.
- One suit has already been granted class-action status by a US federal judge.
- The suits all focus on the alleged way that Google suddenly cancels web publishers' accounts, confiscating all the money accrued in them, without a detailed explanation why.
- The newest suit claims a New Hampshire company called Bulletin Marketing lost $268,593. The company claims it doesn't know what it did wrong.
Google has again been sued in US federal court by a web publisher alleging that the search giant does not refund advertisers when it discovers they have spent money on "invalid" clicks, and instead wrongly retains the money for itself.
The suit is at least the fourth in a string of suits against Alphabet's Google search unit making similar allegations. One case won a ruling granting it class-action status in July of this year.
The complaint, filed in the Northern District of California on Wednesday, comes from a New Hampshire company, Bulletin Marketing, which claims that Google took more than quarter of a million dollars in ad fees without explanation in violation of Google's agreement with Bulletin. Upon spotting a violation of its rules, Google closed Bulletin's entire account. Bulletin is arguing that some - possibly most - of the money in that acccount must have been earned from legitimate clicks, and that therefore Google has simply kept money for itself that was legitimately earned by Bulletin.
Hundreds of thousands of publishers could be affected
The suit is potentially a big deal for Google. The plaintiff believes its case should be extended into a class-action to include "All online publishers and Network Partner Managers that have displayed advertisements served from [Google's] DoubleClick Ad Exchange" (AdX). That covers a huge number of website publishers, the suit alleges. "There are tens of thousands, if not hundreds of thousands, of online publishers that have displayed advertisements served from the DoubleClick Ad Exchange and nearly all of them have, at one point in time, had their accrued earnings reduced by Google on account of what Google claimed to be fraudulent or invalid click activity or impressions," the suit says.
Google provides a large and complex set of platforms through which advertisers can place their ads. Advertisers choose their budgets and what type of consumers they want to reach, and Google automatically fills the request across thousands of websites that offer their empty ad space for sale on those systems. Google takes a cut of all the money flowing through the system, typically around one-third of the total spent. Publishers get the rest.
If Bulletin wins its case, the alleged damages could easily run into the tens or perhaps even hundreds of millions of dollars. Publishers who have complained publicly so far have typically lost six-figure sums. Business Insider in 2014 reported on the case of one company, Pubshare, that claimed it lost more than $1 million (£746,000) after Google decided there were invalid clicks on its site. Brian Wieser, a senior research analyst at the Pivotal Research Group, estimates that $14 billion (£10.4 billion) in sales runs through AdX annually. Google earned $15.5 billion (£11.5 billion) last year from its "Google Network Members" segment, which includes web publishers, according to its annual report.
Google thinks the suits are 'without merit'
Google is likely to fight the case. It has previously described such suits as "without merit."
"We have a longstanding policy of refunding advertisers for invalid traffic," the company told Business Insider recently. Google expanded its refund program in September to include ads purchased via DoubleClick Bid Manager. Google did not immediately respond to a request for comment.
Google has historically had difficulty explaining why it sometimes suddenly kicks publishers off its systems, confiscating the money those websites had earned from advertisers. To do so would offer clues to hackers, spammers, and other bad actors who seek to game Google's systems for money. Google is highly incentivised to make sure that the sites it places
The new case was filed by Bulletin Marketing, a New Hampshire firm that worked as one of Google's "Network Partner Managers" (NPM). An NPM is an advertising management company that handles the placement of Google ads on a number of websites, typically published by companies that are too small or inexperienced to handle it themselves. NPMs have a uniquely advantageous view of how AdX works, because they have access to both their advertisers Google accounts and their publishers'.
On February 16, 2017, Google suddenly disabled Bulletin's AdX account, the suit claims. About $268,593 accrued in the account as payments due to Bulletin, were cancelled.
The company complained to Google account representative, Merri McCann, the suit says, in an attempt to identify which of the many websites it represented had fallen afoul of Google's rules.
"Ms. McCann responded with non-substantive information, and then ignored all of Bulletin's remaining e-mails. Google summarily rejected Bulletin's internal appeal by means of an auto-generated e-mail that was sent a short time later. On information and belief, nobody at Google closely reviewed Bulletin's appeal, as the appeal form was designed to convey minimal information to Google and give publishers the illusion that Google might reconsider its decision," the suit alleges.
'Google withholds all of those earnings, even though the earnings arising from the 95% of valid traffic were earned fair and square'
The fact that Google cancelled all the money in the account - not just the portion Google believed had been spent on invalid clicks - was a red flag, Bulletin alleges. "Google's actions are particularly egregious because it always confiscates the entirety of an AdX publisher's accrued earnings for the earnings period (which lasts two months) even when the vast majority of that publisher's webpages (or in the case of an NPM, the vast majority of its websites) are fully compliant with all Google policies. In other words, if 5% of a web publisher's traffic during an earnings period was invalid in some way, Google does not withhold the publisher's earnings arising from that 5% of bad traffic. Google withholds all of those earnings, even though the earnings arising from the 95% of valid traffic were earned fair and square in accordance with Google's policies," the suit says.
Bulletin also checked with its ad agency clients in New York and Europe, to see if any of them had received refunds from the cancellation. "None of them had," the suit alleges, "even though multiple AdX and AdSense publishers (including Bulletin) have publicly stated or privately confirmed that Google always determines that a certain percentage of their clicks or impressions for any particular advertisement every month is invalid for one reason or another."
"It's a simple case. Contrary to the terms of its own contract, Google confiscated millions of dollars that belong to the publishers who hosted its ads. We aim to get it back," said Mark Poe of the San Francisco law firm Gaw Poe, who represents Bulletin.
Get the latest Google stock price here.