Klarna’s Free $9B Option on Google
On Friday 26th June Swedish courts will render their verdict on a litigation amount with a face value in excess of Klarna's entire market cap
[Post publication note: the verdict date has now been rescheduled to July 1st]
In late 2014, a newly hired CFO sat down to build his first budget for a Swedish price comparison company called PriceRunner.
The Swedish business looked fine, with decent margins and steady traffic.
He then turned his attention to the UK and, in his words to a Stockholm court 11 years later: “the numbers made ZERO sense”. At the time, the UK was the largest and fastest growing e-commerce market in Europe – yet PriceRunner UK was flatlining on life support.
So he went through the historical data. PriceRunner had installed Google Analytics in the Spring of 2012. Traffic had climbed throughout that year and into the Christmas shopping peak – perfectly normal seasonality patterns so far, right until all the metrics suddenly dropped off a cliff:
“In the middle of December, 80% of all organic traffic just vanished overnight. It looked like an execution. Nothing had changed – the product, the consumer, nothing...and the traffic never returned”
A desperate UK country manager spent years burning money on SEO consultants to no avail. The same product was thriving in Sweden but for some reason the UK seemed impenetrable.
Years later, the truth came to light: Google hard-coded its own comparison-shopping box to the top of search results while its demotion algorithms buried rival comparison sites in the organic results (from which Google’s own service was exempt).
Google’s conduct was condemned in the European Commission’s 2017 Google Shopping decision (€2.4B fine, upheld in full by the CJEU in 2024).
PriceRunner subsequently sued Google in February 2022 for damages.
The claim, including accrued interest, now stands at roughly SEK 90B (~$9B). vs. Klarna’s market cap of ~$7B.
How We Got Here
We covered our original thesis on Klarna in Klarna: Inflection Point? and why we thought the post-IPO sell-off was overdone along with our variant perception of the business.
We subsequently flagged the legal case it had inherited through its acquisition of PriceRunner as a potential catalyst in our May 31st weekly which you should refer to as background.
A free option which which we had not priced in.