Justice Department sues Google for digital ad dominance

WASHINGTON (AP) — The Justice Department and eight states on Tuesday filed an antitrust lawsuit against Google, seeking to break its alleged monopoly over the entire online advertising ecosystem as a hurtful burden on advertisers, consumers and even the US government.

The government alleged in the complaint that Google seeks to “neutralize or eliminate” its rivals in the online advertising market through acquisitions and to force advertisers to use its products by making it difficult to use competitors’ offers. It’s part of a new, albeit slow and hesitant, push by the United States to rein in big tech companies that have seen largely unbridled growth over the past decade and a half.

“Monopolies threaten the free and fair markets on which our economy is based. They stifle innovation, hurt producers and workers, and drive up costs for consumers,” Attorney General Merrick Garland said Tuesday at a press conference.

For 15 years, Garland said, Google has “pursued an anti-competitive course” that has blocked the rise of competing technologies and manipulated the mechanics of online ad auctions to force advertisers and publishers to use its tools. In doing so, he added, Google “engaged in exclusionary conduct” that has “severely weakened,” if not destroyed, competition in the ad tech industry.

The lawsuit, the latest lawsuit filed by the government against Google, accuses the company of unlawfully monopolizing the way ads are served online by excluding competitors. Google’s Ads Manager allows large publishers with significant direct sales to manage their ads. The ad exchange, on the other hand, is a real-time marketplace for buying and selling display ads online.

Garland said Google controls the technology used by most major website publishers to offer ad space for sale, as well as the larger ad exchange that matches publishers and advertisers when ad space is sold. The result, he added, is that “website builders earn less and advertisers pay more.”

The lawsuit, filed in federal court in Alexandria, Va., demands that Google divest itself of the business of controlling the technical tools that manage the buying, selling and auctioning of digital advertising, remaining with search – its core business – and other products and services, including YouTube, Gmail and cloud services.

Alphabet Inc., Google’s parent company, said in a statement that the lawsuit “doubles as a flawed argument that would slow innovation, increase advertising costs and make it harder for thousands of small businesses and businesses to grow.” ‘editors’. Digital ads currently make up around 80% of Google’s revenue and overall support its other less lucrative businesses.

Tuesday’s lawsuit comes as the U.S. government increasingly seeks to rein in Big Tech’s dominance, though such a lawsuit could take years and Congress has passed no recent legislation to curb Big Tech’s dominance. influence of the biggest players in the technology industry.

The European Union has been more active. He launched an antitrust investigation in Google’s digital advertising dominance in 2021. UK and EU regulators are also examining whether a deal on online display advertising services between Google and Meta broke the rules on fair competition.

An internet services trade group that includes Google as a member has described the lawsuit and its “radical structural remedies” as unwarranted.

Matt Schruers, president of the Computer & Communications Industry Association, said competition for advertising is fierce and “governments’ assertion that digital ads do not compete with print, broadcast and outdoor advertising challenges the raison”.

Dina Srinivasan, a Yale University scholar and adtech expert, said the lawsuit is “enormous” because it aligns the entire nation – state and federal governments – in a bipartisan legal offensive against Google . In December 2020, 16 states and Puerto Rico sued Google over the exact same issues.

The current online advertising market, Srinivasan said, “is broken and totally inefficient.” The fact that intermediaries get 30% to 50% of every advertising trade is “crazy inefficiency to have integrated into the American economy”. She called it “a massive tax on the free internet and consumers in general.” This directly affects the viability of a free press”.

As with many highly complex technical markets, it has taken time for federal and state regulators and policymakers to catch up and understand the online advertising market. Srinivasan noted that it took a decade before they realized the dangers of high-speed trading in the financial markets and started adopting measures to discourage it.

This lawsuit seeks to apply to the digital advertising market the same rules that apply to financial markets, she said. Brokers, banks and other companies that sometimes have competing interests are not allowed to own the New York Stock Exchange.

Google had nearly 29% of the U.S. digital advertising market, which includes all the ads people see on computers. phones, tablets and other internet-connected devices – in 2022, according to research firm Insider Intelligence. Facebook’s parent company Meta is second, with almost 20% of the market. Amazon is a distant third, but growing.

But this is not the concern of the trial. It focuses on the technical market mechanisms that Google controls, including the ad server it developed building on the 2008 purchase of market-dominant DoubleClick. According to the DOJ, Google owns more than 90% of the company that serves ads on websites and controls about 80% of the “buyer” Google Ads network where advertisers compete to place ads.

Google, the lawsuit says, has over the past 15 years “used acquisitions and market power in adjacent ad technology markets to stifle the rise of rivals, strengthen its control over how and by what means ad transactions happening and preventing publishers and advertisers from working effectively with Google’s rivals.”

This is the latest lawsuit filed against Google by the Department of Justice or local governments. In October 2020, for example, the Trump administration and 11 state attorneys general sued Google for antitrust violations, alleging anticompetitive practices in the search and search advertising markets.

Asked why the Justice Department would pursue action when a similar suit has already been filed by the states, Assistant Attorney General Jonathan Kanter, the department’s top antitrust official, said, “We conducted our own investigation, and that investigation took place over many years.

States participating in Tuesday’s lawsuit include California, Virginia, Connecticut, Colorado, New Jersey, New York, Rhode Island and Tennessee.

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AP Technology Writer Ortutay reported from San Francisco and Bajak from Boston. AP Technology Writer Matt O’Brien contributed to this report.

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This story was first published on January 25, 2023. It was updated on January 25, 2023 to correct the number of states involved in a lawsuit in 2020. It was 16, not 35.

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