The U.S. Justice Department and eight U.S. states are suing Google for allegedly monopolizing online advertising.
The complaint, filed Tuesday in Virginia, 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.
Owned by Alphabet Inc, Google now controls the digital tool that nearly every major website publisher uses to sell ads on their websites (publisher ad server), the states allege in a news release. It controls the dominant advertiser tool that helps millions of large and small advertisers buy ad inventory (advertiser ad network), and it controls the largest advertising exchange (ad exchange), a technology that runs real-time auctions to match buyers and sellers of online advertising.
Website publishers use ad tech tools to generate advertising revenue that supports the creation and maintenance of a vibrant open web, providing the public with unprecedented access to ideas, artistic expression, information, goods, and services, the governments said in the release. “Through this monopolization lawsuit, the Justice Department and state Attorneys General seek to restore competition in these important markets and obtain equitable and monetary relief on behalf of the American public.”
Over the past 15 years, the suit alleges, Google has engaged in a course of anticompetitive and exclusionary conduct that consisted of neutralizing or eliminating ad tech competitors through acquisitions, wielding its dominance across digital advertising markets to force more publishers and advertisers to use its products, and thwarting the ability to use competing products. “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 governments said in the news release.
The governments are seeking “equitable relief on behalf of the American public as well as treble damages for losses sustained by federal government agencies that overpaid for web display advertising.”
- Acquiring Competitors: Engaging in a pattern of acquisitions to obtain control over key digital advertising tools used by website publishers to sell advertising space;
- Forcing Adoption of Google’s Tools: Locking in website publishers to its newly-acquired tools by restricting its unique, must-have advertiser demand to its ad exchange, and in turn, conditioning effective real-time access to its ad exchange on the use of its publisher ad server;
- Distorting Auction Competition: Limiting real-time bidding on publisher inventory to its ad exchange, and impeding rival ad exchanges’ ability to compete on the same terms as Google’s ad exchange; and
- Auction Manipulation: Manipulating auction mechanics across several of its products to insulate Google from competition, deprive rivals of scale, and halt the rise of rival technologies.
“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 U.S. Attorney General Merrick 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.”
This is the second U.S. government antitrust suit against Google. In 2020, the Justice Department filed a civil antitrust suit against Google for monopolizing search and search advertising, which are different markets from the digital advertising technology markets. This suit is scheduled for trial in September.
According to Politico, Google owns many of the most widely-used tools that advertisers use to place ads on websites, and that publishers use to sell the space. It also owns AdX, one of the most widely used exchanges that match advertisers and publishers in automatic auctions occurring in the milliseconds it takes to load a webpage.
The antitrust advertising suit launched today is similar to one filed against Google by the state of Texas and other states in 2020. Some parts of the Texas-led case were dismissed last year by a federal judge in Manhattan, but much of the case is continuing, Politico says.
The Chamber of Progress, a U.S. group supported by the tech industry, put out a statement decyring today’s action by the Department of Justice.
“The forthcoming lawsuit comes as Google’s market share in the ad tech industry shrinks and as economic headwinds batter the tech and advertising industries,” the statement says.
“Google’s online ad market share is now at an all-time low, and it just laid off 12,000 employees in the midst of a declining advertising market – so this DOJ case seems pretty disconnected from economic reality,” said Chamber of Progress chief executive officer Adam Kovacevich. “As the tech sector and advertising industry shed jobs, the Biden Administration should be looking for ways to support these sectors rather than undermine what’s left.”
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