The Department of Justice and eight U.S. states allege in a federal lawsuit filed Tuesday that Google has monopolized the digital advertising market and are pushing for the company to spin off its ad business.
It’s the government’s second lawsuit versus Google over the past three years, with the trial for the 2020 civil antitrust action – alleging monopolistic practices in search and search-related advertising that netted Google $31.7 billion in revenues in 2021 – scheduled for September.
The feds’ latest move arrives one week after the Mountain View, Calif.-based tech giant announced the layoffs of 12,000 employees as it changes gears in anticipation of an economic downturn and reprioritizes certain business units, including artificial intelligence (AI).
In the 155-page lawsuit filed in the Eastern District of Virginia feds and attorney generals of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia describe how Google acquisitions drove advertising business in violation of antitrust laws.
“One industry behemoth, Google, has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising,” the governments’ lawsuit states.
In a DOJ news release, the agency says Google’s operations violate antitrust laws by “monopolizing multiple digital advertising technology products in violation of Sections 1 and 2 of the Sherman Act.” The products comprise an “ad tech stack,” the government argues, “that website publishers depend on to sell ads and that advertisers rely on to buy ads and reach potential customers.”
Google spokesperson Peter Schottenfels told POLITICO that the lawsuit amounted to government trying to “pick winners and losers in the highly competitive advertising technology sector” and that like another legal action from the Texas Attorney General that was dismissed by a federal court, the DOJ was erroneously “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.”
At the core of the issue is that digital publishers depend on Google’s ad tech to create and monetize online. The feds allege Google has impeded that through “anticompetitive and exclusionary conduct that consisted of neutralizing or eliminating ad tech competitors through acquisitions” and also, by leveraging “its dominance across digital advertising markets” to steer publishers and advertisers to its products. “
The government seeks to “restore competition in these important markets and obtain equitable and monetary relief on behalf of the American public,” the DOJ statement reads.
“No matter the industry and no matter the company, the Justice Department will vigorously enforce our antitrust laws to protect consumers, safeguard competition, and ensure economic fairness and opportunity for all,” Attorney General Merrick Garland said.
Deputy Attorney General Lisa O. Monaco said the complaint “alleges a pervasive and systemic pattern of misconduct through which Google sought to consolidate market power and stave off free-market competition … (while) in pursuit of outsized profits, Google has caused great harm to online publishers and advertisers and American consumers. This lawsuit marks an important milestone in the Department’s efforts to hold big technology companies accountable for violations of the antitrust laws.”
Through its “illegal monopoly, and by its own estimates, Google takes 30% of the advertising that funnels through its ad tech products and even more for some transactions and for some publishers and advertisers. Google’s moves have impeded market rivals, and hindered there market adoption and share.
Soon after the news of the lawsuit broke, American Economic Liberties Project tweeted out it was “thrilled to see the DOJ demand a break up” while suggesting Google as a “buyer, broker, and digital advertising exchange with pervasive conflicts of interest.”