In a recent lawsuit, the US Justice Department has accused Alphabet Inc.’s Google of abusing its dominance in the digital advertising market and threatening to dismantle a key business at the heart of one of Silicon Valley’s most successful internet companies. The government has stated that Google should be forced to sell its ad manager suite, a business that generated about 12 percent of Google’s revenues in 2021 but also plays a vital role in the search engine and cloud company’s overall sales.
“Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” the antitrust complaint said. Google, whose advertising business is responsible for about 80% of its revenue, has responded by stating that the government’s argument is flawed and would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.
The federal government has stated that its Big Tech investigations and lawsuits are aimed at leveling the playing field for smaller rivals to a group of powerful companies that includes Amazon.com, Facebook owner Meta Platforms, and Apple Inc. “By suing Google for monopolizing advertising technology, the DOJ today aims at the heart of the internet giant’s power,” said Charlotte Slaiman, competition policy director at Public Knowledge. “The complaint lays out the many anticompetitive strategies from Google that have held our internet ecosystem back.”
This lawsuit by the administration of President Joe Biden, a Democrat, follows a 2020 antitrust lawsuit brought against Google during the term of Donald Trump, a Republican. The 2020 lawsuit alleged violations of antitrust law in how the company acquires or maintains its dominance with its monopoly in online search and is scheduled to go to trial in September.
Eight states joined Tuesday’s lawsuit, including Google’s home state of California. California State Attorney General Rob Bonta said that Google’s practices have “stifled creativity in a space where innovation is crucial.” Colorado Attorney General Phil Weiser stated that Google’s dominance had led to higher fees for advertisers and less money for publishers with ad space to offer. “We are taking action by filing this lawsuit to unwind Google’s monopoly and restore competition to the digital advertising business,” he said in a statement.
Google shares were down 1.9 percent on Tuesday. In addition to its well-known search, which is free, Google makes revenue through its interlocking ad tech businesses. The government has requested the divestiture of the Google Ad Manager suite, including Google’s ad exchange, AdX.
Google Ad Manager is a suite of tools including one that allows websites to offer advertising space for sale and an exchange that serves a marketplace that automatically matches advertisers with those publishers. Advertisers and website publishers have complained that Google has not been transparent about where ad dollars go, specifically how much goes to publishers and how much to Google.
The lawsuit raises concerns about certain products in the ad tech stack, where publishers and advertisers use Google’s tools to buy and sell ad space on other websites. That business was about $31.7 billion in 2021 or 12.3 percent of Google’s total revenue. About 70% of that revenue goes to publishers. An ad tech divestiture “may not be a game changer but it could be sneaky important to Google’s ad targeting capability,” said Paul Gallant with the Cowen Washington Research Group.
The latest lawsuit against Google by the US Justice Department accuses the company of abusing its monopoly in digital advertising and threatens to dismantle one of its key businesses. The government is asking for Google to be forced to sell its ad manager suite, which generated about 12 percent of Google’s revenue in 2021, but also plays a vital role in the search engine and cloud company’s overall sales. “Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” the antitrust complaint said.
Google, whose advertising business is responsible for about 80% of its revenue, has stated that the government’s argument is flawed and that it would slow innovation, raise advertising fees, and make it harder for small businesses and publishers to grow. The federal government’s investigations and lawsuits against big tech companies are aimed at leveling the playing field for smaller rivals to companies such as Amazon, Facebook, and Apple.
Eight states have joined the lawsuit, including Google’s home state of California. California State Attorney General Rob Bonta stated that Google’s practices have “stifled creativity in a space where innovation is crucial.” Colorado Attorney General Phil Weiser said that Google’s dominance has led to higher fees for advertisers and less money for publishers with ad space to offer. “We are taking action by filing this lawsuit to unwind Google’s monopoly and restore competition to the digital advertising business,” he said in a statement.
In addition to its well-known search, which is free, Google generates revenue through its interlocking ad tech businesses. The government has asked for the divestiture of the Google Ad Manager suite, including Google’s ad exchange, AdX. Google Ad Manager is a suite of tools that allows websites to offer advertising space for sale and an exchange that serves a marketplace that automatically matches advertisers with those publishers.
Advertisers and website publishers have complained that Google has not been transparent about where ad dollars go, specifically how much goes to publishers and how much to Google. The lawsuit raises concerns about certain products in the ad tech stack, where publishers and advertisers use Google’s tools to buy and sell ad space on other websites. That business was about $31.7 billion in 2021 or 12.3 percent of Google’s total revenue. About 70% of that revenue goes to publishers.
An ad tech divestiture “may not be a game changer but it could be sneaky important to Google’s ad targeting capability,” said Paul Gallant with the Cowen Washington Research Group. “It connects to all of Google’s other businesses and ties them together. I think Google might be more concerned about losing ad tech down the road than people might think,” Gallant said.
The company made a series of purchases, including DoubleClick in 2008 and AdMob in 2009, to help make it a dominant player in online advertising.
While Google remains the market leader by a long shot, its share of the US digital ad revenue has been eroding, falling to 28.8% last year from 36.7% in 2016, according to Insider Intelligence. The Justice Department has asked for a jury to decide the case, which was filed in the US District Court for the Eastern District of Virginia. The 149-page complaint details a number of Google’s attempts to dominate the advertising market, including a project named “Project Poirot” that was designed to identify and respond effectively to ad exchanges that had adopted header bidding technology.
Title: “Google Accused of Abusing Monopoly in Digital Advertising by US Justice Department, Lawsuit Threatens to Dismantle Key Business”