DOJ Hits Google With Antitrust Suit Over Ad Market, Calls For ‘Corporate Breakup’

DOJ Hits Google With Antitrust Suit Over Ad Market, Calls For ‘Corporate Breakup’

Update (1320ET):

Alphabet Inc.’s Google responded to the DOJ lawsuit announced in the last hour. The tech giant said the DOJ is “doubling down on a flawed argument,” noting the suit “largely duplicates the unfounded lawsuit by Texas Attorney General.”

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Update (1243ET):

The US Justice Department (DOJ) and eight states sued Alphabet Inc.’s Google over alleged illegal monopolization of the digital advertising market. 

“Google abuses its monopoly power to disadvantage website publishers and advertisers who dare to use competing ad tech products in a search for higher quality, or lower cost, matches,” the DOJ wrote in the complaint, which was filed in the federal court in Virginia. California, New York, and Virginia were among the states that signed the complaint. 

The DOJ’s lawsuit is the second against Google and calls for the breakup of its ad-tech business. This case would be the largest corporate breakup in four decades. 

But competition in the ad tech space is broken, for reasons that were neither accidental nor inevitable. One industry behemoth, Google, has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising. Having inserted itself into all aspects of the digital advertising marketplace, Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” the complaint said. 

And the DOJ complaint continued:

“The harm is clear: website creators earn less, and advertisers pay more, than they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative ad tech tools that would ultimately result in higher quality and lower cost transactions for market participants. And this conduct hurts all of us because, as publishers make less money from advertisements, fewer publishers are able to offer internet content without subscriptions, paywalls, or alternative forms of monetization. One troubling, but revealing, statistic demonstrates the point: on average, Google keeps at least thirty cents—and sometimes far more—of each advertising dollar flowing from advertisers to website publishers through Google’s ad tech tools. Google’s own internal documents concede that Google would earn far less in a competitive market.”

Google controls more than a quarter of all US digital ads, according to Bloomberg data. 

Google shares are down 1.5%. 

WSJ recently noted that DOJ Antitrust Division’s progressive chief, Jonathan Kanter, had been cleared to oversee cases and investigations involving Google.

Here’s the DOJ’s complaint filed against Google: 

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The Department of Justice (DOJ) is reportedly preparing to sue Alphabet Inc.’s Google in an antitrust lawsuit over its alleged monopoly on the digital advertising market, Bloomberg reported, citing people familiar with the matter. 

Google’s dominance in the online ad space and web search marketplace has been under fire from the DOJ, which would mark the second federal antitrust complaint filed against the tech giant. 

People familiar with the matter said the DOJ could file the suit in federal court by the end of the week. The lawsuit would allege violations of antitrust law in how Google maintains its dominance over the digital advertising market. The DOJ hit Google in 2022 with a lawsuit on its online search monopoly, which will head to trial in September. 

This incoming suit would be the fifth major case against the California-based tech giant. US state attorneys general have filed three separate lawsuits over the company’s dominance in advertising, online searches, and apps on the Android mobile platform. 

The lawsuit will center on Google’s advertising business, which accounts for 80% of its business. The company’s advertising practices have caused many publishers and online newspapers to miss out on advertising revenue. 

In 2021, The Daily Mail sued the advertising giant’s monopoly over selling online ad space, which led to very little revenue for the publisher. 

“The lack of competition for publishers’ inventory depresses prices and reduces the amount and quality of news available to readers, but Google ends up ahead because it controls a growing share of the ad space that remains,” the lawsuit said.

The simple fact is that Google is a monopoly gatekeeper for the internet has led to anticompetitive tactics that have crushed all competition. 

What needs to happen is Google’s ecosystem of interlocking monopolies should be broken up to allow competitors to grow the internet; otherwise, the company is just stifling progress in the online space.

Tyler Durden
Tue, 01/24/2023 – 12:43

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Author: Tyler Durden

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