U.S. Justice Department Sues Google Over Dominance Of Digital Advertising Market

U.S. Justice Department Sues Google Over Dominance Of Digital Advertising Market

Updated: 5 days, 15 hours, 27 minutes, 51 seconds ago

The U.S. Department of Justice (DOJ), along with the Attorneys General of eight states on Tuesday filed an antitrust suit against Google over dominance in the digital advertising market, which is harmful to competition.

The eight states taking part in the antitrust suit filed in the U.S. District Court for the Eastern District of Virginia, include California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia.

The federal lawsuit accuses Google of engaging in a course of anticompetitive and exclusionary conduct over the past 15 years that consisted of “neutralizing or eliminating” ad tech competitors through acquisitions, forcing ad buyers and sellers to use its products by making it difficult to use products that other competitors might offer.

The prosecutors said Google “now controls” nearly every major website publisher, the dominant advertiser tool, and the largest advertising exchange (ad exchange), a technology that runs real-time auctions to match buyers and sellers of online advertising.

According to the 140-page lawsuit, Google’s anticompetitive conduct has included:

Acquiring Competitors: Engaging in a pattern of acquisitions to obtain control over key digital advertising tools used by website publishers to sell advertising space;

Forcing Adoption of Google’s Tools: Locking in website publishers to its newly-acquired tools by restricting its unique, must-have advertiser demand to its ad exchange, and in turn, conditioning effective real-time access to its ad exchange on the use of its publisher ad server;

Distorting Auction Competition: 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; and

Auction Manipulation: Manipulating auction mechanics across several of its products to insulate Google from competition, deprive rivals of scale, and halt the rise of rival technologies.

As a result, the California-based tech giant has strengthened its dominance in tools trusted by website publishers and online advertisers, as well as the digital advertising exchange that runs ad auctions.

Meanwhile, Google on average takes more than 30% of the advertising dollars — and sometimes far more — through its digital advertising technology products due to its illegal monopoly, the lawsuit pointed out.

“Google abuses its monopoly power to disadvantage website publishers and advertisers who dare to use competing ad tech products in a search for higher quality, or lower cost, matches,” reads the lawsuit filed in the court on Tuesday.

“Google uses its dominion over digital advertising technology to funnel more transactions to its own ad tech products where it extracts inflated fees to line its own pockets at the expense of the advertisers and publishers it purportedly serves.”

“One industry behemoth, 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 complaint added.

“Having inserted itself into all aspects of the digital advertising marketplace, Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies.”

The DOJ and state Attorneys General through this monopolization lawsuit are seeking to restore competition, obtain equitable and monetary relief on behalf of the American public as well as get treble damages for losses suffered by the federal government agencies that overpaid for web display advertising.

Further, the lawsuit requests the federal judge to stop the search giant from continuing to engage in alleged anticompetitive practices, as well as force Google to break up its advertising business (which accounts for 80% of its revenue) from the rest of the company.

In response to the lawsuit, Google said the advertising market has a lot of competition as more and more companies enter and invest in building their advertising businesses. DOJ’s case against the search giant will only make purchasing advertisements more expensive, it added.

“Today’s lawsuit from the DOJ attempts to pick winners and losers in the highly competitive advertising technology sector,” a Google spokesperson said. “DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.”

This is the second antitrust lawsuit filed by the DOJ against Google. In 2020, the DOJ filed a civil antitrust suit against the search giant for unlawfully maintaining monopolies through anticompetitive and exclusionary practices in the search and search advertising market.

The Google search litigation is scheduled for a trial in September 2023.