On January 24, the United States government filed yet another lawsuit against tech giant Google. The government is claiming Google purposely disadvantaged competitors by abusing its monopoly power in digital advertising. The lawsuit was filed by the Department of Justice (DOJ) and eight state attorneys general in federal district court in Northern Virginia.
“Google’s anti-competitive behavior has raised barriers to entry to artificially high levels, forced key competitors to abandon the market for ad tech tools, dissuaded potential competitors from joining the market, and left Google’s few remaining competitors marginalized and unfairly disadvantaged,” the government wrote in its complaint.
This is not the first federal antitrust lawsuit Google has faced from the DOJ. In 2020, under former president Donald Trump, the DOJ sued the company for abuse of monopoly power in internet search and search-based advertising. That case will be tried beginning in September 2023.
The DOJ’s new lawsuit asks for “structural relief” as part of the damages. In other words, if the suit is successful, the DOJ wants a federal judge to consider breaking up Google’s advertising division in order to reduce its monopoly power.
Google and Facebook are widely thought of as a “duopoly” in online advertising. Together, they make up about 50% of the market, with Google alone controlling 28%, according to the market research firm Insider Intelligence. In part due to the rise of companies like Amazon and TikTok, Google’s control of the market is expected to drop slightly to 26% by 2024.
In the third quarter of 2022, Google raked in $54 billion in advertising revenue.
In a recent press released, the DOJ said Google’s tools for ad buyers and sellers (its ad tech stack) is practically unavoidable for any business operating on the internet — which is just about every business today.
For 15 years, Google has been “driving out rivals, diminishing competition, inflating advertising costs, reducing revenues for news publishers and content creators, snuffing out innovation, and harming the exchange of information and ideas in the public sphere,” said Jonathan Kanter, President Biden’s top antitrust enforcement lawyer.
Google’s 2007 acquisition for $3.1 billion of its then-competitor, adtech company DoubleClick, is considered by many to be the pivotal moment that led to the company’s online ad dominance. That merger was approved by the U.S. Federal Trade Commission, which shares antitrust oversight with the DOJ.
“The DoubleClick acquisition vaulted Google into a commanding position over the tools publishers use to sell advertising opportunities, complementing Google’s existing tool for advertisers, Google Ads, and set the stage for Google’s later exclusionary conduct across the ad tech industry,” the government wrote in its complaint.
Google, however, pushed back against the charges levied by the government.
“Today’s lawsuit from the DOJ attempts to pick winners and losers in the highly competitive advertising technology sector,” said a spokesperson for Google. “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.”