Justice Dept. sues Google over digital advertising dominance
WASHINGTON ( AP) — The Justice Department and eight states filed an antitrust suit against Google on Tuesday, seeking to shatter its alleged monopoly on the entire ecosystem of online advertising as a hurtful burden to advertisers, consumers and even the U.S. government.
The government alleged in the complaint that Google is looking to “neutralize or eliminate” rivals in the online ad marketplace through acquisitions and to force advertisers to use its products by making it difficult to use competitors’ offerings. It’s part of a new, if slow and halting, push by the U.S. to rein in big tech companies that have enjoyed largely unbridled growth in the past decade and a half.
“Monopolies threaten the free and fair markets upon which our economy is based. They stifle innovation, they hurt producers and workers, and they increase costs for consumers,” Attorney General Merrick Garland said at a news conference Tuesday.
For 15 years, Garland said, Google has “pursued a course of anti-competitive conduct” that has stalled the rise of rival technologies and manipulated the mechanics of online ad auctions to force advertisers and publishers to use its tools. In so doing, he added, Google “engaged in exclusionary conduct” that has “severely weakened,” if not destroyed, competition in the ad tech industry.
The suit, the latest legal action brought by the government against Google, accuses the company of unlawfully monopolizing the way ads are served online by excluding competitors. Google’s ad manager lets large publishers who have significant direct sales manage their advertisements. The ad exchange, meanwhile, is a real-time marketplace to buy and sell online display ads.
Garland said Google controls the technology used by most major website publishers to offer advertising space for sale, as well as the largest ad exchange that matches publishers and advertisers together when ad space is sold. The result, he added, is that “website creators earn less and advertisers pay more.”
The lawsuit, filed in federal court in Alexandria, Virginia, demands that Google divest itself of the businesses of controlling the technical tools that manage the buying, selling and auctioning of digital display advertising, remaining with search — its core business — and other products and services
including YouTube, Gmail and cloud services.
Alphabet Inc., Google’s parent company, said in a statement that the suit “doubles 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.” Digital ads currently account for about 80% of Google’s revenue, and by and large support its other, less lucrative endeavors.
Tuesday’s lawsuit comes as the U.S. government is increasingly looking to rein in Big Tech’s dominance, although such legal action can take years to complete and Congress has not passed any recent legislation seeking to curb the influence of the tech industry’s largest players.
The European Union has been more active. It launched an antitrust investigation into Google’s digital ad dominance in 2021. British and European regulators are also looking into whether an agreement for online display advertising services between Google and Meta breached rules on fair competition.
An internet services trade group that includes Google as a member described the lawsuit and its “radical structural remedies” as unjustified.
Matt Schruers, president of the Computer & Communications Industry Association, said competition for advertising is fierce and the “governments’ contention that digital ads aren’t in competition with print, broadcast, and outdoor advertising defies reason.”
Dina Srinivasan, a Yale University fellow and adtech expert, said the lawsuit is “huge” because it aligns the entire nation — state and federal governments — in a bipartisan legal offensive against Google. In December 2020, 16 states and Puerto Rico sued Google over the exact same issues.
The current online ad market, Srinivasan said, “is broken and totally inefficient.” The fact that intermediaries are getting 30% to 50% of the take on each ad trade is “an insane inefficiency to have baked into the U.S. economy.” She called it “a massive tax on the free internet and consumers at large. It directly affects the viability of a free press” as well.
As with many highly complex technical markets, it has taken time for federal and state regulators and policymakers to catch up with and understand the online ad market.