US DoJ Sues Google Ad Domination

US DoJ Sues Google Ad Domination

Updated: 12 days, 4 hours, 46 minutes, 31 seconds ago

Alphabet’ Google is now confronting a serious regulatory investigation of one of its core business operations in its home country.

The US Justice Department (DoJ) announced on Tuesday that it “along with the Attorneys General of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia, filed a civil antitrust suit against Google for monopolising multiple digital advertising technology products in violation of Sections 1 and 2 of the Sherman Act.”

Google is already facing regulatory probes into its ad business in other countries. For example the UK’s competition watchdog in May 2022 launched its second investigation of Google’s ad tech practices, and whether it may have favoured its own services.

DoJ lawsuit

Prior to that in March 2022 the UK’s CMA (as well as the European Commission) had both opened formal antitrust investigations into Google and Meta (aka Facebook).

Now Google is being sued in the United States by the Justice Department and eight states, accusing the company of harming competition with its dominance in the online advertising market and calling for it to be broken up.

Filed in the US District Court for the Eastern District of Virginia, the complaint alleges that Google monopolises key digital advertising technologies, collectively referred to as the “ad tech stack,” that website publishers depend on to sell ads and that advertisers rely on to buy ads and reach potential customers.

As alleged in the complaint, over the past 15 years, Google has engaged in a course of anticompetitive and exclusionary conduct that consisted of neutralising or eliminating ad tech competitors through acquisitions; wielding its dominance across digital advertising markets to force more publishers and advertisers to use its products; and thwarting the ability to use competing products.

In doing so, Google cemented its dominance in tools relied on by website publishers and online advertisers, as well as the digital advertising exchange that runs ad auctions, the DoJ alleges.

Anticompetitive conduct?

“Today’s complaint alleges that Google has used anticompetitive, exclusionary, and unlawful conduct to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” said Attorney General Merrick B. Garland.

“No matter the industry and no matter the company, the Justice Department will vigorously enforce our antitrust laws to protect consumers, safeguard competition, and ensure economic fairness and opportunity for all,” Garland said.

“The complaint filed today alleges a pervasive and systemic pattern of misconduct through which Google sought to consolidate market power and stave off free-market competition,” added Deputy Attorney General Lisa O. Monaco.

“In pursuit of outsized profits, Google has caused great harm to online publishers and advertisers and American consumers,” said O. Monaco. “This lawsuit marks an important milestone in the Department’s efforts to hold big technology companies accountable for violations of the antitrust laws.”

The DoJ alleges that Google now controls the digital tool that nearly every major website publisher uses to sell ads on their websites (publisher ad server); it controls the dominant advertiser tool that helps millions of large and small advertisers buy ad inventory (advertiser ad network); and it controls the largest advertising exchange (ad exchange), a technology that runs real-time auctions to match buyers and sellers of online advertising.

Google conduct

Specifically, the DoJ alleges that 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.

The DoJ alleges that as a result of its illegal monopoly, and by its own estimates, Google pockets on average more than 30 percent of the advertising dollars that flow through its digital advertising technology products; for some transactions and for certain publishers and advertisers, it takes far more.

In 2019 it was reported that attorney generals from more than 30 US states were readying an anti-trust investigation of Google. That probe was to focus on Google’s “overarching control of online advertising markets and search traffic that may have led to anticompetitive behaviour that harms consumers.”

Then in 2020, the Justice Department filed a civil antitrust suit against Google for monopolising search and search advertising, which are different markets from the digital advertising technology markets at issue in the Tuesday lawsuit.

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

Google response

In a statement to CNN, Google said the DoJ suit “attempts to pick winners and losers in the highly competitive advertising technology sector.”

“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,” a Google spokesperson was quoted by CNN as saying.

The spokesperson added that a federal judge last year knocked down a claim that Google colluded with Facebook in a separate antitrust suit led by the state of Texas.

That judge also ruled, however, that a number of monopolisation claims in the Texas case could move forward.

Asked to respond to Google’s statement, Garland reportedly said Tuesday: “We don’t pick winners or losers. We pick those who violate the antitrust laws. Those are the people we sue.”

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