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It is the first major antitrust lawsuit against a tech company in the Biden administration, continuing efforts started under former President Donald Trump.
It’s also the latest in a barrage of antitrust lawsuits against Google. It’s both the DOJ’s second case, and the second case targeting its ad business. The DOJ and a group of state attorneys general sued in October 2020 over Google’s dominance in web searches, and a Texas-led group of state attorneys general challenged its advertising business later that year. Yet another case was filed by a Utah-led group of states in 2021 over Google Play, its mobile app store.
“Today’s lawsuit from the DOJ attempts to pick winners and losers in the highly competitive advertising technology sector,” said Google spokesperson Peter Schottenfels. “It largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was recently dismissed by a federal court. 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.”
Progressives applauded the case. “As the Justice Department’s suit meticulously documents, Google is a buyer, broker, and digital advertising exchange with pervasive conflicts of interest,” said Matt Stoller with the American Economic Liberties Project. “Google regularly abuses this power, manipulating markets, muscling out any form of competition, and inspiring fear across the commercial landscape.”
Filed in a Virginia federal court with a reputation for speedy resolutions, the lawsuit contends that Google’s dominance in all facets of online advertising, which it achieved in part through a series of acquisitions dating back nearly 15 years, gives the company too much control over tools used to buy, sell, and display ads. Those tools are the primary source of revenue for much of the web.
According to data from eMarketer, a digital advertising data service, Google is the largest company in the digital ad market that’s estimated to be worth nearly $280 billion in 2023. That’s up from $250 billion for 2022.
Google’s dominance allows the company to collect 30 cents for every dollar advertisers spend through its tools that place ads across the web, according to Tuesday’s case, which cites internal Google documents.
“New York consumers and small businesses are paying the price of Google’s actions,” said Attorney General Tish James. “When website publishers get less ad revenue because of Google’s monopolies, they have to either lower the quality of their website, or pass on costs to consumers.”
The new lawsuit is similar to the Texas case, which is also focused on so-called display advertising, or the images, text and videos that often run on news, sports, and smaller ecommerce websites and some blogs. Google owns many of the most widely-used tools that advertisers and publishers use to sell space and place ads online. It also owns AdX, one of the most widely used exchanges that match advertisers and publishers in automatic auctions occurring in the milliseconds it takes to load a webpage.
Both the DOJ and Texas-led cases use high speed electronic stock trading as an analogy to describe Google’s business. The cases accuse Google of conflicts of interest by working on behalf of publishers and advertisers as well as operating the leading electronic advertising exchange that matches the two, and selling its own ad space on sites like YouTube.
“The analogy would be if Goldman [Sachs] or Citibank owned the New York Stock Exchange,” Jonathan Kanter, head of the DOJ’s antitrust division said Tuesday at a press conference.
Google has previously said the online ad market is intensely competitive, and pointed to a number of startups and tech giants like Amazon, Meta and Microsoft that all compete in the sector.
Citing the U.S. Army an advertiser, including for recruitment ads, Kanter said the federal government itself is a victim of Google’s conduct. This allows the department to seek damages, something that it’s not typically able to do in civil antitrust cases.
Some parts of the Texas-led case were dismissed last year by a federal judge in Manhattan, but much of the case is continuing.
“In the complaint, the department alleges that Google engaged in 15 years of sustained conduct that had and continues to have the effect of driving out rivals diminishing competition, inflating advertising costs, reducing website publisher revenues, stymieing innovation and flattening our public marketplace of ideas,” Kanter said at the press conference.
Google’s online advertising operations were largely pieced together through a series of acquisitions, which is a key focus of Tuesday’s case. DOJ’s case goes into more exhaustive detail about Google’s acquisition history, calling out specific businesses it wants sold off, including Google’s advertising exchange, which matches publishers and advertisers in real time for the billions of ads across the web.
The deals date back to Google’s 2008 acquisition of DoubleClick, which helps websites sell ad space. In 2011 it bought AdMeld, another tool used by websites. In 2010 it bought Invite Media, used by large companies for placing online ads, and in 2009 it acquired mobile ad company AdMob.
Through this extensive control of the market, DOJ said Google is able to manipulate advertising prices to its advantage and steer publishers and advertisers to use its ad tools. Google then is able to take an outsize cut of the money, raising costs for advertisers, and lowering revenue for publishers.
Google’s supporters however called the case misguided.“Google’s online ad market share is now at an all time low, and it just laid off 12,000 employees in the midst of a declining advertising market — so this DOJ case seems pretty disconnected from economic reality,” said Adam Kovacevich, CEO of the tech-funded Chamber of Progress. “As the tech sector and advertising industry shed jobs, the Biden administration should be looking for ways to support these sectors rather than undermine what’s left.”
Tuesday’s suit, in the works since 2019, is just the latest piece of the global backlash against the market power of the world’s largest technology companies — one of the rare issues in recent years that garners broad bipartisan support. Google, Apple, Meta’s Facebook and Amazon are facing investigations and lawsuits on six continents. European lawmakers recently passed legislation designed to curb the companies’ dominance and pressure is building in the U.S. for Congress to pass similar laws.
“The harm is clear,” the new complaint states. “[W]ebsite creators earn less, and advertisers pay more, than they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative ad tech tools that would ultimately result in higher quality and lower cost transactions for market participants.”
Josh Gerstein contributed to this report.
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( With inputs from : www.politico.com )