-15.1 C
New York

Google Hit with DOJ Antitrust Suit Over Online Advertising Monopoly – The Hollywood Reporter

Published:


The Department of Justice and several states have brought another federal antitrust lawsuit against Google, accusing the company of abusing its dominance to stifle competition in the digital advertising market. 

The government alleges in a suit filed on Tuesday that Google has engaged in a “systematic campaign” to “neutralize and eliminate” competitors through a series of acquisitions to leverage its power to force advertisers to use its products “while disrupting their ability to use competing products effectively.”

The complaint calls to break up the Alphabet-owned company, mainly most of its advertising products that help ad firms buy ads on the internet. Google made $209 billion in ad sales in 2021, accounting for 81 percent of its revenue. Meta, the second largest ad company, made $115 billion in ad revenue that year.

The case will be a major test in the government’s efforts to rein in Big Tech, which has been targeted by federal competition regulators under the Biden administration. In 2020, the Justice Department sued Google over its dominance in the search engine market. Facebook is also facing legal action from the Federal Trade Commission in a suit alleging it suppresses competition in social networking.

In a statement, Google stressed that the suit faults the company for succeeding in the “highly competitive advertising technology sector.”

“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,” the tech giant said.

Eight state attorneys general representing California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia joined in the suit, which was filed in federal court in Virginia. The complaint claims violations of the Sherman Act.

Like in the FTC’s suit against Facebook, the government takes aim at an allegedly anticompetitive acquisition scheme employed by Google to monopolize the adverting market. It points to the company’s purchase of DoubleClick, which had the industry-leading publisher ad server at the time of its purchase in 2007, for $3.1 billion. The deal provided Google with direct access to website publishers, including their ad inventory, in addition to a significant presence with advertiser, according to the suit.

“The DoubleClick acquisition provided Google the unilateral power to implement a series of anticompetitive restraints, using its dominance on both the publisher and advertiser sides of the market to inhibit competition across the entire ad tech stack,” reads the complaint.

The suit says Google acknowledged in internal company documents a strategy of cornering the market on operating systems for ad sales to capitalize on the high switching costs.

Following the acquisition, Google cemented its position as the dominant intermediary between advertisers and publishers through a series of additional purchases that “eliminated potential competitors and further bolstered Google’s position in open digital advertising.” Since 2009, Google has acquired AdMob, which allows mobile app publishers to sell ads, Invite Media, which enables advertisers and agencies to bid in real time on display ad space and AdMeld, which helps publishers field ad offers from advertisers.

By entrenching itself as the necessary middleman between advertisers and publishers, Google had the monopoly power to lock out rivals through its control of key ad tech tools, according to the suit. The company limited where and how much other ad tech providers competed. Notably, Google made its Google Ads’ demands available only to publishers through its publisher ad server.

“By allowing only its own publisher ad server effective access to important, unique Google Ads’ demand, Google could force publishers to adopt and remain on its publisher ad server; other ad servers could not compete to offer a similar product,” reads the complaint. “But this restriction meant Google Ads’ advertisers could not buy inventory available only on other ad exchanges or via non-Google publisher ad servers, and they could not take advantage of fee competition that might make that advertising inventory less expensive.”

The suit also targets policies that allegedly force more transactions to flow through Google’s platforms and make it more difficult for publishers to switch ad servers. It claims that Google distorted auction competition by limiting real-time budding on publisher inventory to its ad exchange and manipulated auction mechanics across several of its products to halt the rise of competitors.

In a blog post, Google claimed that its products “expand choice” and “make it easy for businesses to reach consumers through cost-effective digital advertising.”

Under the Biden administration, federal competition regulators have emphasized that antitrust laws aren’t meant to prioritize consumer prices or efficiencies but to broadly protect competition.

“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,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division.

Google faces a slew of antitrust violations around the world. In addition to legal action in the U.S., European Union competition regulators have collectively fined the company $8.4 billion since 2017 related to its dominance over search engine, the Android operating system and advertising.



Related articles

Recent articles