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US sues Google, demanding collapse of ad tech ‘monopoly’

 


The US Department of Justice and eight states sued Alphabets Google on Tuesday, seeking to break up the search giant’s ad tech business over its illegal monopoly of the digital advertising market.

The lawsuit filed today by Google blames Google for its longstanding monopoly in digital advertising technology that content creators use to sell ads and advertisers use to buy ads on the open internet. The Department of Justice’s antitrust chief, Jonathan Cantor, said: Tuesday’s press conference announcing the lawsuit.

New York, California and Virginia were among the states that signed the complaint filed in federal court in Virginia.

In a blog post, Google said the lawsuit seeks to pick winners and losers in the highly competitive ad tech space. The lawsuit largely overlaps with unsubstantiated lawsuits by the Texas Attorney General, many of which were recently dismissed by federal courts. DOJ doubles down on flawed arguments that slow innovation, drive up advertising costs, and make growth difficult for thousands of small businesses and publishers.

Following the news, Alphabets’ stock price continued to fall, dropping 2.5% to a session low. The stock fell 23% in the 12 months to Monday, trailing the Nasdaq 100 Index.

Regardless of industry or company, the Department of Justice aggressively enforces antitrust laws, Atty. General Merrick Garland said at a press conference.

The lawsuit represents the first major lawsuit in which the Biden administration has challenged the power of one of America’s largest tech companies, following an investigation launched under former President Trump. It’s also one of the few instances in which the Justice Department has demanded the dissolution of a large corporation since it dismantled the Bell Telecommunications System in 1982.

Google is the dominant player in the $278.6 billion US digital advertising market, controlling most of the technology used to buy, sell and serve online advertising. The Justice Department said Google’s dominance could keep advertisers from spending $1 to at least $0.30 through online advertising tools. It could take years to resolve this case.

Google’s reach across the ad tech industry has been questioned by digital advertising executives, according to the complaint.

The lawsuit is the Department of Justice’s second antitrust lawsuit against Google and the fifth major lawsuit in the United States challenging the company’s business practices. The state attorney general has filed three separate lawsuits against Google, alleging that he has unlawfully controlled markets for online search, advertising technology, and apps on his Android mobile platform. I’m here.

For 15 years, Google has engaged in anti-competitive behavior, including a pattern of acquisitions to gain market control, Justice Department Antitrust Director Kanter said at a press conference.

This includes its $3.1 billion acquisition of online advertising giant DoubleClick in 2007, which the Justice Department is now winding down.

The DOJ complaint also seeks damages from Google for allegedly overbilling federal agencies such as the U.S. Army that purchased online advertising. The agency said the U.S. government has spent more than $100 million of him on online display ads since 2019, but the complaint did not indicate how much the Justice Department is seeking to recover. rice field.

The allegations in the DOJ lawsuit mirror those brought by 16 state and Puerto Rico attorneys general in 2020. That lawsuit is pending in federal court in New York.

According to 2023 estimates from research firm EMarketer, the Mountain View, Calif.-based company is number one in the $626.9 billion global digital advertising market, with the United States accounting for the largest portion. Alphabet’s advertising business is expected to bring in his $73.8 billion in US digital advertising revenue in 2023. Most of that ($58.5 billion) comes from Google’s search advertising business. The remaining $15.3 billion came from display advertising. Google operates an ad-buying service for marketers and an ad-selling service for publishers, as well as an exchange where both parties complete transactions in ultra-fast auctions.

These exchanges work like online stock trading platforms with automated bidding processes. Competitors and publishers complain that Google uses parts of this vast network (such as ad exchanges) to benefit other sectors and knee-jerk rivals. Google alone is expected to bring in about $65.7 billion in U.S. digital ad revenue this year, according to EMarketer, which accounts for about 26.5% of the market, with YouTube at 2.9%.

According to EMarketer, the company’s market share has been steadily declining from its 2015 high of 37.4% of U.S. digital ad spending.

Google claims that the market for online advertising is a crowded and highly competitive market. In court filings and testimony before Congress, the company said its competitors include other major players in the ad tech market, such as Amazon.com, Meta Platforms and Microsoft.

Interagency scrutiny of Google’s dominance of the ad tech market dates back to the Trump administration. At that time, he was in Atty’s Department of Justice. Major General William Barr sued Google over its search business, claiming the company used exclusive distribution agreements with wireless carriers and phone makers to keep competition out. The case is scheduled for trial in September.

Agencies continued to explore ad tech under Biden. After Kantor was confirmed to head the antitrust division in November 2021, Google told the Justice Department that Kantor should be barred from all actions involving the company because of his past work representing critics. Kanter was barred from working on Google’s exclusive investigation while the Justice Department deliberated on Kanter’s possible resignation. The Justice Department ultimately ruled that Kanter could work on her Google-related case.

Sources

1/ https://Google.com/

2/ https://www.latimes.com/business/story/2023-01-24/us-sues-google-ad-market-antitrust-fight

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