Beset with legal setbacks, Google to spend $500 million in overhaul

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Pushed against the wall after three back-to-back lawsuit defeats, Google has now agreed to a sweeping $500 million settlement with shareholders that mandates major internal reforms aimed at curbing anticompetitive behaviour.

The settlement, which stems from a consolidated derivative lawsuit filed by shareholders, requires Alphabet Inc., Google's parent company, to spend the money over the next decade to overhaul its compliance structure. 

A newly formed board-level committee will oversee antitrust and regulatory risks and report directly to CEO Sundar Pichai — an unusual move for a US tech company.

The agreement, obtained by Bloomberg Law, also mandates reforms at lower levels of the company, empowering employees to flag potential legal pitfalls before they spiral into costly litigation. 

In a notable shift, Google has agreed to preserve more of its internal communications, abandoning the use of auto-deleting chat features that had previously drawn judicial ire in several antitrust proceedings.

Although Alphabet denies any wrongdoing, the company is expected to pay tens of millions more in legal fees in addition to the $500 million investment. 

The deal still awaits approval from US District Judge Rita Lin in San Francisco, though the approval is widely considered a formality.

"This reflects our ongoing commitment to compliance," a Google spokesperson said, according to Ars Technica. "To avoid protracted litigation, we're happy to make these commitments."

The litigation, which began in 2021 with a lawsuit from a Michigan pension fund, accused Google of jeopardising its long-term value through "prolonged and ongoing monopolistic and anticompetitive business practices."

That claim has gained traction in the wake of recent legal losses.

In 2023, Google was found liable in an antitrust case brought by Epic Games concerning its app distribution practices. 

In 2024, the US Department of Justice successfully argued that Google illegally maintained a monopoly in search. 

Most recently, the company lost a major advertising antitrust case, threatening its core business model.