What happens if your small business sues Google? Right or wrong, you are betting the business on that case. If you lose, Google's legal costs will consume your entire business.
That said, it's hard for your small business to sue Google anyway.
I've always had an idea that whoever loses a civil suit pays the other party the lower of the legal costs of both parties. So if small company A fights big company B, small company A would only have to pay twice it's legal costs, even if megacorp decides to spend smallcorp's yearly sales in the defense. If megacorp sues a small company, then small company can decide to fight it if they think they have a case and have enough reserves (which are easy to estimate since they will be based on 2xs your legal costs if you lose, 0 if you win).
Yes, your idea is even better than what we have in Poland. In Poland we basically have "loser pays" but the legal costs returned by the loser are limited by law and typically depend on the type of the case and the amount of money requested in the lawsuit. These limits are lower than the typical cost of good legal companies. Therefore even if a big company with expensive lawyers wins, it will not get back all of its legal costs.
Except that my rule makes it easier to sue Google if you have a good case.
The whole point of "Loser Pays" is to filter out the frivolous, weak, and marginal cases. But it also makes it easier to file the strong and meritorious cases, because you know you're going to win (eventually), and they'll pay for it.
Of course because the strong cases get settled out of Court, the overall effect is that a lot fewer cases will go to Court at all and this is generally a good thing (IMO). The Court system is overburdened, which means it can take months or years for meritorious cases to just get a hearing and trial. Prisoners can languish for years in prison without conviction of guilt, just awaiting trial.
Furthermore you have to think about the unseen costs. All those businesses that are never formed in the first place because of these legal tactics. My guess is that small businesses that are put out business by lawsuits are outnumbered 100:1 or more by potential businesses that never get past the planning stages.
It shouldn't be based on actual costs but on an averaged estimation; and it shouldn't be automatic but left at the discretion of the court, specifically to punish frivolous litigation.
That said, it's hard for your small business to sue Google anyway.