DOJ sues Google over its dominance in online advertising market



CNN

The Justice Department and eight states sued Google on Tuesday, accusing the company of harming competition with its dominance of the online advertising market and calling for it to be broken up.

The move marks the Biden administration’s first blockbuster antitrust case against a Big Tech company. The eight states joining the suit include California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia.

The new complaint significantly increases the risk to Google emanating from Washington, where lawmakers and regulators often raise concerns about the tech giant’s power but have so far failed to pass new laws or regulations that might constrain the company or its peers. .

For years, Google’s critics have claimed that the company’s broad role in the digital ecosystem that allows advertisers to place ads, and for publishers to offer digital ad space, represents a conflict of interest that Google has exploited in an anticompetitive manner.

In Tuesday’s complaint, a copy of which was seen by CNN, the Justice Department alleged that Google actively and illegally maintained that dominance by engaging in a campaign to thwart competition. Google harms rivals through anticompetitive mergers, the US government says, and bullies publishers and advertisers into using the company’s proprietary ad technology products.

For 15 years, Google’s alleged anticompetitive behavior resulted in lower ad revenue for websites and publishers, as well as higher advertising costs for marketers, Attorney General Merrick Garland said during a press conference Tuesday. Even the US government was harmed, according to the complaint, which names the US Army as one of several government advertisers using Google’s tools. Since 2019, the US government has spent $100 million buying online ads, the complaint said.

As part of the lawsuit, the US government called for Google to be broken up and the court ordered the company to turn over at least its online advertising exchanges and ad servers for publishers, if not more.

Google, the US government alleged, “has undermined legitimate competition in the ad technology industry by engaging in a systematic campaign to seize control of a wide range of high-tech tools used by publishers, advertisers and brokers, to facilitate digital advertising. Having inserted itself into all aspects of the digital advertising market, Google has used anticompetitive, exclusionary and illegal means to eliminate or severely reduce any threat to its dominance of digital advertising technology.”

The suit was filed in the US District Court for the Eastern District of Virginia.

Tuesday’s suit marks the federal government’s second antitrust complaint against Google since 2020, when the Trump administration sued over Google’s alleged anticompetitive harm in search and search advertising. The case is still ongoing. Google has also been the target of antitrust litigation by state and private actors.

In a statement, Google said the DOJ suit “is an attempt to pick winners and losers in the highly competitive advertising technology sector.”

“The DOJ is doubling down on flawed arguments that will slow innovation, raise advertising fees and make it harder for thousands of small businesses and publishers to grow,” a Google spokesman said, adding that a federal judge last year dismissed claims that Google colluded with Facebook in a separate antitrust suit. led by the state of Texas. The judge also ruled, however, that some of the monopoly claims in the Texas case could move forward.

Asked to respond to Google’s statement, Garland said on Tuesday: “We don’t pick winners or losers. We single out those who violate antitrust laws. That’s the person we’re suing.”

The lawsuit is a frontal attack on Google’s massive advertising business. Google generated $209 billion in advertising revenue in 2021, according to its annual report, a figure that represents more than 80% of its total revenue. By comparison, the next largest giant in online advertising, Facebook parent Meta, generated $115 billion in 2021. (Tuesday’s suit targets the subset of Google’s ad revenue represented by display advertising, about $32 billion of business for the company.)

Third-party estimates suggest that Google and Facebook account for the majority of US digital ad revenue, peaking around 2017, with Google taking about a third of the market. Since then, however, others including Amazon have begun to break into the business.

The US complaint echoes concerns that have prompted similar antitrust investigations in the United Kingdom and in the European Union.

Google not only controls the platform publishers use to sell ad inventory online, the Justice Department alleged on Tuesday, but also the advertising tools marketers use to claim that inventory and the exchanges that facilitate those transactions.

“Google’s pervasive power over the entire ad tech industry has been questioned by its own digital advertising executives,” the complaint said, “at least one of whom aptly posed the question: ‘[I]Are there deeper issues with us owning such a large platform, exchange and network? The analogy would be if Goldman or Citibank owned the NYSE.’”

Tuesday’s complaint marked the opening salvo against Big Tech by DOJ antitrust chief Jonathan Kanter. Kanter has spent months laying the groundwork for a broader attack on the tech industry’s most dominant companies, reflecting a commitment by President Joe Biden and others in the US government to hold powerful firms accountable. Under Kanter, Justice Department antitrust officials have pushed to bring more cases to trial and prosecute cases involving unconventional legal theories.

On Tuesday, Kanter told reporters that Google was abusing its “longstanding monopoly in digital advertising technology” to give itself an advantage.

“Google’s own documents estimate that it keeps at least 30 cents of every advertising dollar that flows through Google’s advertising tools,” Kanter said, adding that in some situations the figure could be much higher.

In 2020, House lawmakers released a 450-page report that found Google, along with Amazon, Apple and Facebook, held “monopoly power” in key business segments. The report is the result of a 16-month investigation in which congressional staff reviewed corporate documents and interviewed numerous technology industry customers and competitors. It concludes, among other things, that Google is uniquely positioned to benefit from its powerful role in the online advertising industry.

“With a large share of the ad exchange market and ad intermediary market, and as a major provider of ad space, Google acts simultaneously on behalf of publishers and advertisers, while also trading for itself,” the report said.

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