The US Justice Department and eight states have filed an antitrust suit against Google seeking to shatter its alleged monopoly on the entire ecosystem of online advertising
- The US attorney-general says “website creators earn less and advertisers pay more”, because of Google
- Google held nearly 29 per cent of the US digital advertising market in 2022
- An internet services trade group described the lawsuit as unjustified
The suit describes the internet giant’s conduct as a hurtful burden to advertisers, consumers and even the US government.
The government alleges that Google’s plan to assert dominance has been to “neutralise or eliminate” rivals through acquisitions and to force advertisers to use its products by making it difficult to use competitors’ products.
The antitrust suit was filed in federal court in Alexandria, Virginia.
Attorney-General Merrick Garland said in a press conference on Tuesday (local time) that “for 15 years, Google has pursued a course of anti-competitive conduct” that has halted 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 has engaged in exclusionary conduct” that has “severely weakened,” if not destroyed, competition in the ad tech industry.
“First, Google controls the technology used by nearly every major website publisher to offer advertising space for sale. Second, Google controls the leading tool used by advertisers to buy that advertising space. And third, Google controls the largest ad exchange that matches publishers and advertisers together each time that ad space is sold,” Mr Garland said.
As a result, he added, “website creators earn less and advertisers pay more”.
And this means fewer publishers can offer their content without subscriptions, paywalls and other fees to make up for revenue.
The department’s suit accuses Google of unlawfully monopolising the way ads are served online by excluding competitors.
This includes its 2008 acquisition of DoubleClick, a dominant ad server, and subsequent rollout of technology that locks in the split-second bidding process for ads that get served on web pages.
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.
The lawsuit demands that Google break off three different businesses from its core business of search, YouTube and other products such as Gmail: the buying and selling of ads and ownership of the exchange where that business is transacted.
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.”
Industry group says lawsuit ‘defies reason’
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 was 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 was “huge” because it aligned the entire nation — state and federal governments — in a bipartisan legal offensive against Google.
The current online ad market “is broken and totally inefficient,” Ms Srinivasan said.
The fact that intermediaries are getting 30 to 50 per cent of the take on each ad trade is “an insane inefficiency to have baked into the US economy”, she said, calling it “a massive tax on the free internet and consumers at large.
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.
Ms Srinivasan noted that it took a decade before they woke up to the perils of high-speed trading in financial markets and began adopting measures to discourage it.
Google held nearly 29 per cent of the US digital advertising market — which includes all the ads people see on computers. phones, tablets and other internet-connected devices — in 2022, according to research firm Insider Intelligence.
Facebook parent company Meta is second, commanding nearly 20 per cent of the market.
Amazon is a distant, but growing, third at more than 11 per cent.
Leave a Reply