The Justice Department and a group of eight states Google sued in the agency’s first antitrust lawsuit against a tech giant under President Biden and escalating legal pressures on one of the world’s largest internet companies.
The lawsuit alleges that Google “corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the vast array of high-tech tools used by publishers.” , advertisers and brokers to facilitate digital advertising”.
The lawsuit asked the U.S. District Court for the Eastern District of Virginia to compel Google to sell its suite of ad technology products, including software to buy and sell ads, a marketplace to complete the transactions, and a service to show the ads on the web Internet. The lawsuit also asked the court to prevent the company from engaging in alleged anti-competitive practices.
It’s the fifth antitrust lawsuit by US officials against Google since 2020, as lawmakers and regulators around the world seek to curb the power big tech companies wield over information and online commerce. In Europe, Amazon, Google, Apple and others have faced antitrust investigations and charges, as have regulators enact new laws to limit the harm of social media, and some practices such as data collection.
In the United States, Google has come under particular scrutiny. In 2020, a Texas-led group of states filed an antitrust lawsuit over advertising technology, while the Justice Department and another group of states separately sued Google over allegations abusing its dominance over online search. In 2021, some states also sued the company’s app store practices.
The new lawsuit “adds another important complication to Google’s efforts to negotiate with regulators around the world,” said William Kovacic, a former chair of the Federal Trade Commission. “There is a chance that one or more of these challenges will prevail and hit the target.”
Peter Schottenfels, a spokesman for Google, said the lawsuit “attempts to pick winners and losers in the highly competitive advertising technology sector.” It mirrors Texas’ “baseless” lawsuit in 2020, he said, adding that the Justice Department’s latest lawsuit makes a flawed argument that would slow innovation and hurt publishers.
Attorney General Merrick B. Garland said monopolies “threaten the free and fair markets on which our economy is based.” He added, “We will aggressively protect consumers, safeguard competition and work to ensure economic fairness and opportunity for all.”
The Biden administration is attempting to clip the wings of some of America’s largest corporations with unusual legal theories. The FTC recently asked a judge to stop Meta from doing so Buying a virtual reality startup, a rare case of arguing that a deal could harm potential competition in an emerging market. The agency also has challenged Microsoft’s $69 billion purchase of the video game publisher Activision Blizzard, a remarkable move since the two companies are not primarily seen as direct competitors.
Those efforts are likely to face stiff resistance in federal courts. Judges have held for decades that antitrust violations should be measured primarily by whether they raise prices for consumers. But Jonathan Kanter, the head of the Justice Department’s antitrust division, and Lina Khan, the chair of the FTC, have said They’re willing to lose cases that allow them to push the boundaries of the law and catch the eye of American corporations.
Tuesday’s lawsuit details a campaign by Google to monopolize advertising technology and then abuse that dominance to the detriment of publishers, advertisers and ultimately consumers.
The Justice Department and the states, which include New York and California, said Google built its monopoly by buying key tools that served ads to publishers. As a result, advertisers paid more for web space and publishers made less money because Google got its share, they said.
“Every time a threat has surfaced, Google has used its market power in one or more of these ad tech tools to suppress the threat,” the lawsuit reads. “The result: Google’s plan for permanent, industry-wide dominance has worked.”
The new lawsuit echoes allegations made in the 2020 lawsuit supported by Texas and 14 other states and territories over Google’s ad technology. This lawsuit received mixed reception in court. A federal judge in New York in September reigns that part of the case could go ahead, but dismissed a lawsuit over a deal between Google and Facebook that states said was anticompetitive.
Google’s search engine has long been its profit center, but its ad tech division has helped cement its place as a one-stop shop for advertisers. The two companies combined have given the company a strong advantage in setting online ad prices. Because Google’s various advertising tools and platforms are tightly integrated, a forced divestment could be a painful and difficult process for the company.
Alphabet, Google’s parent company, is expected to report fourth-quarter financial results on February 2 amid a downturn in the online advertising market.
Google has been expanding its online advertising tools for years. It’s $3.1 billion to buy In 2007, DoubleClick, a maker of advertising tools, expanded the reach of its already powerful digital advertising engine. DoubleClick gave Google a critical role on the web by providing a marketplace for publishers and letting Google host more ads on sites across the web.
At the time, Google had $16.6 billion in annual revenue, mostly from its search engine business. As of 2021, the company’s advertising technology division generated $31.7 billion in revenue, making it the second-largest business unit after the flagship search engine. In the first three quarters of 2022, the unit generated revenue of $24.3 billion.
Google has long faced allegations from online publishers that its control of the digital ad ecosystem has unfairly undermined the profits of the sites that display its ads.
A group representing publishers, including The New York Times Company, has pressed Congress to allow websites to negotiate the terms of advertising deals with Google and other online platforms. Normally, such coordination would be inadmissible under antitrust law. The publishers’ efforts have so far been unsuccessful.
The Justice Department said that Google’s tight control of the ad-tech market hurts not only publishers and advertisers but also internet users, arguing that publishers have fewer resources to create content for visitors to their sites.
Google announced this on Friday 12,000 employees laid off, or 6 percent of its workforce, in response to a slowdown in the digital advertising market. The company said the cuts would allow it to prioritize Artificial intelligence projectsan area that has been gaining momentum in Silicon Valley in recent months.
