The U.S. Justice Department and 8 states filed a lawsuit against Google on Tuesday, alleging the company has unlawfully maintained a monopoly in online advertising technology.
This is the first antitrust lawsuit against a tech giant under President Biden, and an increase in legal action against one of the largest internet companies. This comes after it sued Google back in 2020.
Attorney General Merrick B. Garland Delivers Remarks on Lawsuit Against Google for Monopolizing Digital Advertising Technologieshttps://t.co/c3OvTqefMV
— Justice Department (@TheJusticeDept) January 24, 2023
U.S. Accuses Google of Abusing Monopoly in Advertisement Technology
This lawsuit follows another one filed more than two years ago, in which the Justice Department and several state attorneys general alleged that Google’s search and search advertising practices broke U.S. antitrust laws. The new lawsuit from the Justice Department claims that Google’s advertising tools keep competitors out of the online advertising market and prevent publishers from making money from their own content.
Google has faced increased antitrust scrutiny in the United States. In 2020, Texas led a group of states in filing an antitrust lawsuit against the company related to advertising technology. The Justice Department and another group of states also filed separate lawsuits against Google, accusing it of abusing its power in online search. Additionally, in 2021, some states filed a lawsuit against the company over its app store practices.
The lawsuit cited that Google has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers and brokers to facilitate digital advertising.
The lawsuit also states that Google’s anticompetitive conduct includes:
- Acquiring competitors to gain control over key digital advertising tools used by website publishers to sell advertising space.
- Forcing website publishers to use its newly-acquired tools by limiting advertiser demand to its ad exchange, and in turn, requiring the use of its publisher ad server to access its ad exchange.
- Limiting real-time bidding on publisher inventory to its ad exchange, and impeding rival ad exchanges’ ability to compete on the same terms as Google’s ad exchange.
- Manipulating auction mechanics across several of its products to insulate Google from competition, deprive rivals of scale, and halt the rise of rival technologies.
Currently, Google controls the main advertiser tool that helps millions of small and large advertisers buy ad inventory (the advertiser ad network), the main advertiser tool that almost all major website publishers use to sell ads on their websites (the publisher ad server), and the largest advertising exchange (the ad exchange), a technology that conducts real-time auctions to match buyers and sellers of online advertising.
Due to its illegitimate monopoly, Google often receives more than 30% of the advertising revenue that passes through its products for digital advertising; however, it may receive much more in some cases and for specific publishers and advertisers.
Alternative technologies have been suppressed by Google’s anticompetitive behavior’s, preventing rivals, advertisers, and publishers from implementing them. While the markets for digital advertising technologies at issue in the complaint filed today are distinct from those for search and search advertising, the Justice Department sued Google in 2020 for monopolizing those sectors. Trial in the Google search lawsuit is set for September 2023
Google’s response to the lawsuit
In response to the lawsuit, Google has stated that the DOJ’s lawsuit overlooks the significant competition present in the online advertising industry. They argue that their services have helped create more competition and choice, not less, and that they have enabled many new businesses to thrive.
Google’s official statement is that the government should not involve in choosing winners and losers in a competitive industry. They believe that they are one of many companies that enable the placement of ads across the internet, and that competition is increasing as more companies invest in building their advertising businesses.
In its statement, Google cited other companies as examples of the intense competition in the online advertising industry. They mentioned that last year, Microsoft acquired Xandr, an advertising platform that, like Google and many of its competitors, has a full ad tech stack that serves advertisers and publishers.
In addition, Google states that its products increase choice for publishers and advertisers. The company argues that the lawsuit misrepresents how their advertising technology products function. Google claims that its products assist publishers in making money to fund their websites, apps, and videos, which helps internet users access a wide range of free content. It also claims that it makes it easy for businesses to reach consumers through cost-effective digital advertising.
Google further said that the DOJ’s lawsuit would undo years of innovation, hurting the broader advertising industry. They acknowledged that the current Administration has emphasized the importance of antitrust enforcement in reducing prices and increasing choice for the American people, and that they agree with this perspective.
Speaking on the lawsuit, Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division, said,
Today’s lawsuit seeks to hold Google to account for its longstanding monopolies in digital advertising technologies that content creators use to sell ads and advertisers use to buy ads on the open internet. Our complaint sets forth detailed allegations explaining how Google engaged in 15 years of sustained conduct that had — and continues to have — the effect of driving out rivals, diminishing competition, inflating advertising costs, reducing revenues for news publishers and content creators, snuffing out innovation, and harming the exchange of information and ideas in the public sphere.
Speaking on the DOJ’s lawsuit, Dan Taylor, Vice President, Global Ads, said,
But this lawsuit would have the opposite effect, making it harder for Google to offer efficient advertising tools that benefit publishers, advertisers and the wider U.S. economy. Antitrust cases shouldn’t penalize companies that offer popular, efficient services, particularly in difficult economic times.
And they shouldn’t force companies to reverse 15-year-old investments that they have nurtured and worked hard to make successful, especially when those investments were already reviewed by regulators and allowed to proceed.
We’ve spent years building and investing in our advertising technology business to support a vibrant, open web. We will vigorously contest attempts to break tools that are working for publishers, advertisers, and people across America.