The Justice Department files a second antitrust suit against Google, seeking to break up its advertising business
On Tuesday, the US Department of Justice filed its second antitrust lawsuit The Google In just over two years. It’s the latest sign that the US government isn’t backing down from cases against tech companies even in light of Mixed record on court on antitrust lawsuits.
Google shares fell 1.3% Tuesday afternoon.
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This lawsuit you focus on The Google The online business and seeks to have Google divest parts of its business, the first against the company filed under the Biden administration. Section Previous lawsuitIn October 2020 under the Trump administration, Google was accused of using its alleged monopoly power to cut off competition for Internet search through exclusion agreements. this case He is expected to go to trial in September.
Google’s advertising business generated $54.5 billion in the quarter ended September 30th from search, YouTube, Google Network ads, and other advertising.
Google also faces three more antitrust lawsuits from large groups of state attorneys general, including one She focused her advertising activity under the leadership of Texas Attorney General Ken Paxton.
California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia have joined the DOJ in the latest lawsuit.
Google’s advertising business has drawn critics because the platform operates on multiple aspects of the market — buying, selling, ad exchange — giving it a unique view of the process and potential leverage. The company has long denied that it controls the online advertising market, citing market share from competitors including Meta Facebook.
In their lawsuit, the Department of Justice and the States argues that Google sought to control all aspects of the market, realizing that it “could become the perfect and definitive site for all advertising services.”
“Google will no longer have to compete on merit; it can simply set the rules of the game to exclude competitors,” they claimed.
According to the complaint, even one Google advertising executive has questioned the wisdom of Google’s extensive ownership in the space.
“[I]Is there a deeper problem with our ownership of the platform, the exchange, and a huge network? the executive allegedly asked. The analogy would be if Goldman or Citibank owned the New York Stock Exchange. “
They claim that the harm caused by Google’s practices is that “website builders earn less and advertisers pay more than they pay in a marketplace where unrestrained competitive pressure can fine-tune prices and lead to more innovative advertising technology tools that ultimately lead to higher quality and lower-cost transactions for participants.” In the market “.
As a result, they added, more publishers are being forced to turn to alternative models such as subscriptions to fund their operations.
The complaint alleges that another part of Google’s strategy is to acquire other companies to grow its power in the advertising market and “pave the way for Google’s subsequent exceptional behavior across the advertising technology industry.” These acquisitions included the purchase of publisher DoubleClick’s ad server in 2008 and an “emerging ad exchange” that became Google’s AdX. This allowed Google to require publishers in some cases to use all of its tools to reach any one, rather than working with competing tools for parts of the online ad buying process.
“In reality, Google was stealing from Peter (advertisers) to pay Paul (publishers), while collecting huge transaction fees for its premium positioning in the middle, the enforcers claim.” Instead of helping to fund website publishing, Google was withdrawing It makes advertising money for itself by charging hyper-competitive fees on its platforms. And a competing publisher’s ad server can’t compete with Google’s inflated ad rates, especially without access to Google’s captive advertiser order from Google Ads.”
Google continued to identify potential threats to its dominance, the complaint alleges, such as when yield management tools became available to help publishers find better prices for their stock in real time outside of Google’s ecosystem.
“Therefore, in response, Google used a familiar tactic: acquire any competitive threat, then suppress it,” the complainants wrote, referring to Google’s 2011 acquisition of AdMeld. After the deal, they alleged that Google changed its AdX contracts to prevent publishers from using other platforms to force its exchange to compete with others in real time.
“The lawsuit filed today by the Department of Justice attempts to pick winners and losers in the fiercely competitive advertising technology sector,” a Google spokesperson said in a statement. It largely duplicates a baseless lawsuit by the Texas Attorney General, many of which have recently been dismissed by a federal court. The DOJ doubles down on a flawed argument that will slow innovation, raise advertising fees, and make it more difficult for thousands of small businesses and publishers. “.
The progressive head of the Justice Department’s antitrust division, Jonathan Kanter, was recently authorized to work on matters related to Google, The Wall Street Journal reported earlier this month. bloomberg I previously reported that Kanter was not allowed to work on cases involving the company while management evaluated Google’s request to review its denial reasons. Prior to taking office in government, Kanter represented some of Google’s opponents and critics, including howling And News Corp.
A Google spokesperson said in a statement released last year that Kanter’s past work and statements “raise serious concerns about his potential for bias.”
Google isn’t the only tech giant that has seen scrutiny from the federal government. at the Federal Trade Commission, meta He is also the subject of two antitrust cases, as is Microsoft The proposed acquisition of Activision.
Google and other technology companies have also faced increasing scrutiny from abroad, particularly in Europe, where Google has also grappled with several competition issues and new regulations Threatening major changes in technology business models.
The company reports its earnings on February 2nd.
This story is evolving. Check back for updates.
WATCH: Google faces a fast and furious pace of lawsuits as antitrust scrutiny intensifies