On August 5, 2024, Judge Amit Mehta of the US District Court for the District of Columbia ruled that Google had used its monopoly over general search to charge advertisers more for text ads than a competitive market would allow. The ruling runs 286 pages. Buried in it are three internal mechanisms, which Google’s own engineers called “pricing knobs,” that pushed your cost per click upward for years without telling you why.
This is not the first time a Google Ads customer has found out, after the fact, that an undisclosed rule was shaping their results. MarketEnterprises already covered one layer of that opacity: the moment Google Ads quietly started approving ads without fully serving them. The antitrust ruling adds a second, bigger layer: the auction price itself was never a neutral number set purely by supply and demand.
Three pricing knobs, dated and documented
The court’s findings of fact, now published in full, name three mechanisms Google used to raise what the winning bidder pays, independent of the advertiser’s own bid, ad quality, or competition for the keyword. AdExchanger’s review of the ruling lays out all three with their internal names and active periods:
- Format pricing (2012-2019): ads using sitelink extensions, callouts, or structured snippets paid more to keep their position, accounting for roughly 15% of text ad revenue in 2019.
- Squashing (2014 onward, internal code name “Butternut Squash”): artificially inflates the predicted click-through rate of the second-place bidder, which pushes up what the top bidder has to pay to stay first.
- rGSP, the randomized generalized second-price auction (2019 onward): multiplies the runner-up’s score by an adjustable factor, so the winner pays against that inflated score or is randomly bumped out of their position, with no way to opt out. The court found this raised cost per click by 5% to 6% on top ad positions.
None of the three changed your bid, your Quality Score, or your competitors’ bids. They changed the math behind the price you paid for the position you already won.
What the judge said, in his own words
Judge Mehta did not describe a single dramatic price hike. He described a pattern of small, repeated ones, timed so advertisers would not notice. His own words, quoted by AdExchanger: “The only apparent constraint on Google’s pricing decisions are potential advertiser outcry and bad publicity.” And on the method itself, Google “endeavored to raise prices incrementally, so that advertisers would view price increases as within the ordinary price fluctuations.”
That is the part worth sitting with if you manage a Search budget. A CPC that creeps up by a few cents a quarter looks like market pressure. The court’s finding is that some of that creep, for close to a decade, was a design choice rather than a market signal.
What changes now, and what is still unresolved
A separate remedies order, issued September 2, 2025, requires Google to publicly disclose any material change it makes to its ad auction mechanics going forward, according to reporting on the remedies decision. That order became final in December 2025 and partly took effect in February 2026. It does not undo the three pricing knobs retroactively, and it does not ban Google from adjusting auction scoring again. It means the next change has to be announced instead of discovered a decade later in a court filing.
The case is also not finished. Both Google and the Justice Department are appealing to the US Court of Appeals for the DC Circuit, with briefing still underway as of mid-2026 and no ruling expected soon. Treat the pricing knobs as a historical practice a federal court has documented with dates and figures, under an appeal that has not yet been decided, not as a closed, settled matter or as a mechanism still running exactly as described today.
A $218 billion arbitration wave, and why it stops at the US border
Since April 2026, a wave of US businesses has filed arbitration demands against Google, built directly on Judge Mehta’s findings. Google Ads’ own terms of service include an arbitration clause that blocks a traditional class action, so advertisers are filing individual arbitration claims instead. Keller Postman, a Chicago firm whose attorney Ashley Keller previously coordinated mass arbitrations against DoorDash and Intuit, has filed thousands of claims on behalf of US advertisers and expects tens of thousands more. An economist retained for the claims put the potential damages, across Search and Display combined, as high as $218 billion. Comparable mass arbitrations typically take 12 to 18 months to resolve.
If you are reading this outside the United States, the practical answer is straightforward: none of this arbitration process is available to you. It rests on US arbitration law and the specific terms Google Ads advertisers accepted under US jurisdiction. None of the sources reviewed for this piece, including coverage from AdExchanger, Bloomberg Law, and Claims Journal, describe an equivalent class action, arbitration mechanism, or confirmed European procedure for advertisers outside the US.
A different Google case, not to be confused with this one
A second, separate Google antitrust case is moving through the courts at the same time, and it is easy to conflate the two. That case concerns the ad exchange technology publishers use to sell ad space, not the Search auction advertisers bid into. Judge Leonie Brinkema found Google liable there first; the damages phase now sits with Judge P. Kevin Castel in the Southern District of New York, who has cleared roughly 5,000 publishers to pursue $1.7 billion as a certified class, with USA Today and the Daily Mail separately seeking about $900 million and $600 million, according to Bloomberg Law’s reporting. The plaintiffs there are publishers, not advertisers, and the underlying conduct is different. It sits in the same broader pattern of regulatory scrutiny on Google, alongside cases like the EU’s 403 million euro fine over its use of location data for advertising purposes, but it is not the pricing knobs case, and the two should not be merged into one generic “Google lawsuit.”
What this actually gives you
You cannot join the arbitration wave from outside the US, and you cannot undo a decade of auction pricing you never saw. What you do have, starting now, is something closer to a paper trail: under the remedies order, Google has to say publicly when it changes how the auction scores your bid. If you manage Search campaigns, that disclosure is worth reading when it is published. It will tell you more about why your cost per click moved this quarter than another benchmark report comparing average CPCs across industries. An interesting question worth tracking next: whether a similar transparency requirement eventually reaches the AI agents now managing some Google Ads accounts, which make bidding decisions with even less visibility than a human buyer ever had.
Photos: Pixabay.
