Google settles shareholder lawsuit, will spend $500M on being less evil

Google could also be liable for legal fees in the case.

It has become a common refrain during Google's antitrust saga: What happened to "don't be evil?" Google's unofficial motto has haunted it as it has grown ever larger, but a shareholder lawsuit sought to rein in some of the company's excesses. And it might be working. The plaintiffs in the case have reached a settlement with Google parent company Alphabet, which will spend a boatload of cash on "comprehensive" reforms. The goal is to steer Google away from the kind of anticompetitive practices that got it in hot water.

Under the terms of the settlement, obtained by Bloomberg Law, Alphabet will spend $500 million over the next 10 years on systematic reforms. The company will have to form a board-level committee devoted to overseeing the company's regulatory compliance and antitrust risk, a rarity for US firms. This group will report directly to CEO Sundar Pichai. There will also be reforms at other levels of the company that allow employees to identify potential legal pitfalls before they affect the company. Google has also agreed to preserve communications. Google's propensity to use auto-deleting chats drew condemnation from several judges overseeing its antitrust cases.

The agreement still needs approval from US District Judge Rita Lin in San Francisco, but that's mainly a formality at this point. Naturally, Alphabet does not admit to any wrongdoing under the terms of the settlement, but it may have to pay tens of millions in legal fees on top of the promised $500 million investment.

"Over the years, we have devoted substantial resources to building robust compliance processes," a Google spokesperson said. "To avoid protracted litigation we're happy to make these commitments."

This case is what's known as a consolidated derivative litigation, where multiple shareholder lawsuits are combined into a single action. The litigation stretches back to 2021, when a Michigan pension fund accused Google of harming the company's future by triggering widespread antitrust and regulatory actions with "prolonged and ongoing monopolistic and anticompetitive business practices." That accusation has only gained more weight in the years since it was made.

Today, Google is coming off three major antitrust losses. In 2023, Google lost an antitrust case brought by Epic Games that accused it of anticompetitive practices in app distribution. In 2024, the US Department of Justice successfully showed that Google has illegally maintained a search monopoly. Finally, Google lost the advertising antitrust case earlier this year, putting its primary revenue driver at risk.

These legal salvos could cost the company billions in fines and force major changes to its business. Google is facing a world in which it might need to open Google Play to other app stores, hand over advertising data to competitors, license its search index, and even sell the Chrome browser. Perhaps the reforms will lead to a changed company, but that won't undo the damage from the current spate of antitrust actions.

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