A judge is hearing arguments for and against the settlement of a click-fraud lawsuit that critics say lets Google off the hook too easily.
In April, Judge Joe Griffin gave preliminary approval to the proposed settlement of a nationwide class-action lawsuit filed by lead plaintiff Lane's Gifts and Collectibles against Google over the thorny problem of click fraud.
The problem occurs when someone clicks on a pay-per-click ad with a malicious intent. For example, a company official may click on competitors' ads to increase their ad spending, or a publisher may click on his website's ads to increase his commissions.
In all cases, advertisers end up paying for clicks that don't generate any business leads. Estimates about click-fraud incidence vary, with some putting it as high as 20 percent of all clicks.
On Monday and Tuesday of this week, Judge Griffin is holding a hearing about the settlement agreement to later decide whether or not to give it final approval.
Lane's Gifts, whose February 2005 lawsuit includes other internet companies such as Yahoo and AOL, agreed to settle with Google for $90m. A third of that amount would go to pay attorneys' fees and the rest as credits to affected advertisers.
The class includes buyers of Google online ads between 1 January 2002 and the date when the agreement becomes final. Advertisers will receive credit for click-fraud instances they can certify.
In the settlement, Google denies the plaintiffs' claims and doesn't admit any wrongdoing or legal liability
However, critics say that the settlement amount is too small and that the agreement terms are too favourable to Google, whose revenue comes almost entirely from pay-per-click ads.