Google to pay $100 million to settle advertisers' class action

By Jonathan Stempel

(Reuters) - Google has agreed to pay $100 million in cash to settle a long-running lawsuit claiming it overcharged advertisers by failing to provide promised discounts and charged for clicks on ads outside the geographic areas the advertisers targeted.

A preliminary settlement of the 14-year-old class action, which began in March 2011, was filed late Thursday in the San Jose, California, federal court, and requires a judge's approval.

Advertisers who participated in Google's AdWords program, now known as Google Ads, accused the search engine operator of breaching its contract by manipulating its Smart Pricing formula to artificially reduce discounts.

The advertisers also said Google, a unit of Mountain View, California-based Alphabet, misled them by failing to limit ad distribution to locations they designated, violating California's unfair competition law.

Thursday's settlement covers advertisers who used AdWords between January 1, 2004, and December 13, 2012.

Google denied wrongdoing in agreeing to settle.

"This case was about ad product features we changed over a decade ago and we're pleased it's resolved," spokesman Jose Castaneda said in an emailed statement.

Lawyers for the plaintiffs may seek fees of up to 33% of the settlement fund, plus $4.2 million for expenses.

According to court papers, the case took a long time as the parties produced extensive evidence, including more than 910,000 pages of documents and multiple terabytes of click data from Google, and participated in six mediation sessions before four different mediators.

The case is Cabrera et al v Google LLC, U.S. District Court, Northern District of California, No. 11-01263.

(Reporting by Jonathan Stempel in New York; Editing by Mark Porter)