Google, Facebook's next big problem could come from people like ‘Mr Sweepy’

Google is facing antitrust cases from Europe’s top competition enforcer, the Justice Department and attorneys general from more than 30 states and territories.

Then there are the lawsuits from people like Mr Sweepy.

The operator of a website called Sweepstakes Today, Mr Sweepy — a nickname used by Craig McDaniel — says Google used its power over online advertising to bleed his website dry. In December, he filed a lawsuit against Google, saying he was entitled to “substantial” damages.

His case is one of what is expected to be a host of private antitrust lawsuits stemming from the government cases against Google and Facebook.

Read | France fines Google 1.1 million euros over hotel rankings practices

Already, more than 10 suits echoing the federal and state cases have been filed against one or both of the Silicon Valley giants in recent months. Many of them lean on evidence unearthed by government investigations. Last month, for example, a media company in West Virginia sued Google and Facebook, arguing that the tech companies had worked together to monopolize the digital ad market. Its lawyers extensively cited evidence from the government cases.

Legal experts say many more suits are likely to be filed this year.

The suits add to the mounting legal pressure on the tech companies. Federal and state officials have filed three lawsuits against Google, saying it illegally maintained monopolies in search and the online advertising market. Lawsuits filed against Facebook by the Federal Trade Commission and a group of states could seek to break the company up.

If successful, private lawsuits could be costly for Facebook and Google. The companies work with millions of advertisers and publishers every year, and Google hosts apps from scores of developers, meaning there are many potential litigants. The damages could be significant. After the United States sued Microsoft for antitrust violations a generation ago, the company paid $750 million to settle with AOL, at that point the owner of the browser Netscape, which was at the core of the government’s case.

“There’s a fair amount of scrambling going on and folks trying to figure out what private suits might be successful and how to bring them,” said Joshua Davis, a professor at the University of San Francisco’s law school.

Read | Life without Google: Australia is now facing the unthinkable

Facebook declined to comment about the lawsuits. Julie Tarallo McAlister, a spokesperson for Google, said in a statement that the company would defend itself against the claims.

“Like other claims courts have rejected in the past, these complaints try to substitute litigation for competition on the merits,” she said.

The private suits follow the government ones for a simple reason: Regulators have distinct advantages when it comes to obtaining evidence. Federal and state investigators can collect internal documents and interview executives before filing a suit. As a result, their complaints are filled with insider knowledge about the companies. Private individuals can seek that kind of evidence only after they file lawsuits.

If the government cases succeed against Google or Facebook at trial, the win is likely to bolster the case for private lawsuits, experts said. Lawyers could point to those victories as evidence the company broke the law and move quickly to their primary aim: obtaining monetary damages.

The people bringing the cases against the tech giants include publishers, advertisers and users.

Sweepstakes Today, the site run by McDaniel aggregates prize contests from around the country. Its revenue comes from advertising that is sold partly by Google, according to McDaniel’s lawsuit, which is seeking class-action status.

Read: Google partners brace for hit as search giant threatens Australia exit

For years, the website generated about $150,000 in annual revenue and turned a profit, according to the complaint. But its revenue has dropped since 2012, a fall that the suit blames on Google’s dominance in online advertising.

McDaniel, who signs some of his public messages as “Mr. Sweepy,” said on a GoFundMe page he set up to help cover the costs of running the site that his revenue had “dropped like a rock” and that he could go out of business. He said Google had also harmed his earnings by classifying his site as a venue for online gambling, causing him to receive lower-quality ads.

“As Google has literally taken over the internet, it is nearly impossible for companies to operate in this area without utilizing some Google service, thereby subjecting themselves to Google’s arbitrary rules and policies,” John Herman, McDaniel’s lawyer, said in a statement.

Other publishers that recently have filed antitrust complaints against Google include lyrics website Genius — which sued Google in 2019 citing its use of Genius’ lyrics data in search results, only to have its case dismissed — and progressive magazine The Nation. Both are among the plaintiffs in a lawsuit filed by law firm Boies Schiller Flexner that is seeking class-action status. Another prominent law firm, Berger Montague, has also filed a complaint against Google on behalf of publishers.

Read: Why the world is watching Australia's new Big-Tech rules

Patrick Madden, a shareholder at Berger Montague, and Mark Mao, a partner at Boies Schiller Flexner, declined to comment.

One of the suits coming from advertisers was brought by the operator of WineClubReviews.net, which says Facebook abused its power to charge higher prices for ads.

Others suits represent private citizens who use the social network. Some of the users are arguing that Facebook can use their personal data without adequately compensating them for it because it has the power of a monopoly.

The sweeping government claims against Facebook have helped convince potential plaintiffs that they might have a winning case, even against huge companies like Google and Facebook.

“I think it adds credibility to the allegations,” said Tina Wolfson, a California lawyer who filed a private lawsuit against Facebook.

Read: Microsoft offers to step in if rival Google quits Australia

But lawyers bringing the lawsuits also face difficulties. The tech companies have armies of lawyers to fight back against the suits. They may try to force the cases to go to arbitration, in which each individual claim would be weighed on its own rather than in one big group, rather than to trial. And the law includes limitations on which private citizens can sue over antitrust violations.

It may also be difficult to calculate payouts. The tech giants generally offer their products free to users, and it could be difficult to calculate the money hypothetically lost by an advertiser or a publisher.

Still, the potential payouts are big, given the size of the tech companies.

“You’re talking about billions of dollars as, at least, potential liability,” said Davis of the University of San Francisco.