The Department of Justice, and eight U.S. states including California and New York, sued Google in January for allegedly monopolizing digital advertising technologies in a case that could have far-reaching consequences for both the tech giant and businesses that rely on its ad tech stack.
“Today’s complaint alleges that Google has used anticompetitive, exclusionary, and unlawful conduct to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” said Attorney General Merrick B. Garland. “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.”
Scott Clark, writing in CMSWire, says the DOJ lawsuit could have an impact on both advertisers and marketers, consumer privacy, as well as the overall tech sector.
Filed in the U.S. District Court for the Eastern District of Virginia, the complaint alleges that Google monopolizes key digital advertising technologies, collectively referred to as the “ad tech stack,” that website publishers depend on to sell ads and that advertisers rely on to buy ads and reach potential customers.
As alleged in the 149-page complaint, over the past 15 years, Google has engaged in a course of anticompetitive and exclusionary conduct that consisted of:
The lawsuit argues that in doing so, Google cemented its dominance in tools relied on by website publishers and online advertisers, as well as the digital advertising exchange that runs ad auctions.
“The complaint filed today alleges a pervasive and systemic pattern of misconduct through which Google sought to consolidate market power and stave off free-market competition,” said Deputy Attorney General Lisa O. Monaco. “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.”
The Associated Press says the lawsuit “demands that Google divest itself of the businesses of controlling the technical tools that manage the buying, selling, and auctioning of digital display advertising, remaining with search — its core business — and other products and services including YouTube, Gmail, and cloud services.”
The legal action is just the latest investigation launched against Google and its parent company Alphabet.
The Associated Press reported that:
“The Department’s landmark action against Google underscores our commitment to fighting the abuse of market power,” said Associate Attorney General Vanita Gupta. “We allege that Google has captured publishers’ revenue for its own profits and punished publishers who sought out alternatives. Those actions have weakened the free and open internet and increased advertising costs for businesses and for the United States government, including for our military.”
The DOJ says that Google now controls:
“Today’s lawsuit seeks to hold Google to account for its longstanding monopolies in digital advertising technologies that content creators use to sell ads and advertisers use to buy ads on the open internet,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Our complaint sets forth detailed allegations explaining how 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 revenues for news publishers and content creators, snuffing out innovation, and harming the exchange of information and ideas in the public sphere.”
Google issued a response via a statement from Dan Taylor, Vice President of Global Ads for Google.
“Today’s lawsuit from the Department of Justice attempts to pick winners and losers in the highly competitive advertising technology sector,” wrote Taylor. “It largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was recently dismissed by a federal court. [The] 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.
Google argues that they are just “one of hundreds of companies that enable the placement of ads across the Internet” and says competition in online advertising is increasing including:
“With this increased competition, it’s no wonder fees across the industry are reportedly flat or falling for digital display advertising technology,” wrote Taylor.
The CMSWire coverage of the lawsuit says that the outcome matters to those who advertise and market online:
“Because Google is such a big player in the technology sector, the impact of the DOJ’s lawsuits will be felt in many areas, both positively and negatively. Repercussions could affect advertisers and marketers, consumer privacy trends, and innovation,” wrote Clark in CMSWire.
Some experts think that if Google was forced to be split into smaller components because of the lawsuit (think the break-up of Ma Bell in the 1980s), then digital advertising competition could increase.
“[Smaller players] would likely be able to increase their market share and profitability, and advertisers might see a reduction in costs for ads,” Matt Hallett, head of product solutions at Amperity, an enterprise CDP provider, told CMSWire.
Breaking up Google could also help stall the move toward data privacy since the tech giant is such a leader in setting uniform industry standards in the area.
“Separating Google will increase competition in the advertising industry, which could lead to lower costs and more innovative products for advertisers," Hallett said. "With multiple companies vying for ad dollars, there would likely be more opportunities for advertisers to reach their target audiences through various channels. More competition could increase efficiency in ad spending and a better return on investment."
Like many lawsuits, however, the reality is that it could take years for a verdict to be reached.
“Google now has a chance to respond to the DOJ's initial complaint, and the process will be slow. Typical antitrust suits of this scale can take years to resolve, and some have taken more than a decade,” reported Axios.