U.S. Sues Google Over Alleged Advertising Monopoly—Latest Tech Antitrust Suit

Topline

The Department of Justice and eight states filed a civil antitrust lawsuit against Google on Tuesday, claiming the tech giant abuses its monopoly on online advertising technology and has stifled its competition through a series of acquisitions—the latest in a series of antitrust suits against Google and other large tech companies.

Key Facts

In the suit, filed in federal court in Virginia, the Justice Department alleges Google has “corrupted legitimate competition” in the online ad space through a “systematic campaign to seize control of” online tools used to facilitate advertising.

Specifically, the suit alleges Google has purchased its ad tech competitors and continues to “wield its dominance” online, forcing advertisers to use the site and “disrupting their ability to use competing products effectively.”

Google’s alleged monopoly creates disadvantages for website publishers and other online advertisers “who dare to use competing ad tech products” for “higher quality or lower cost matches,” according to the suit.

As a result, Google has “severely weakened, if not destroyed competition,” while making “website creators earn less and advertisers pay more,” Attorney General Merrick Garland said in a press conference Tuesday afternoon.

The suit, filed by the DOJ along with California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia, violated the federal Sherman Act—which prohibits monopolization and the attempt or conspiracy to monopolize—and seeks to break up the company’s ad tech service by forcing it to shed some of its ad business.

Contra

In a statement to Forbes, a Google spokesperson argued 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 company has denied previous accusations that it had monopolized the digital ad space, as well as an earlier antitrust complaint that it cut out rivals through its search engine. Google argued in late 2020 that its ad tech prices had fallen in recent years, which it called “the hallmarks of a highly competitive industry.”

Crucial Quote

“Google, a single company with pervasive conflicts of interest, now controls the technology used by nearly every major website publisher to offer advertising space for sale, the leading tools used by advertisers to buy that advertising space, and the largest ad exchange that matches publishers with advertisers each time that ad space is sold,” according to the suit.

Key Background

The lawsuit is the second filed by the DOJ against Google. An October 2020 suit filed under the Trump Administration claimed Google had violated antitrust law by stunted competition in internet searches through a series of “exclusionary practices” that have been “harmful to competition.” That case is set to go to trial in September. In 2020, a group of states led by Texas Attorney General Ken Paxton filed another suit targeting Google’s ad tech services, alleging Google and Facebook used an unlawful agreement to fix advertising prices—Google denied those allegations. Last July, a group of 36 states filed a separate suit alleging Google and its parent company, Alphabet, broke antitrust law by taking large fees for purchases in its Play store app, and accusing the company of making it difficult for people to use competing app marketplaces on Android phones (Google, in response, said the fees help cover the cost of running safe app marketplaces).

Surprising Fact

The Biden Administration has sought to step up antitrust enforcement. It successfully blocked a merger between publishing companies Simon & Shuster and Penguin Random House last year, and it is challenging an alliance between American Airlines and JetBlue, Meta’s planned acquisition of virtual reality company Within and Microsoft’s purchase of video game giant Activision Blizzard. The Federal Trade Commission is also suing Facebook parent company Meta over its acquisitions of Instagram and WhatsApp, after a previous Trump-era suit against Meta was tossed out by a federal judge.

Big Number

$7.9 billion. That’s how much Google took in during the third fiscal quarter of 2022 through its “Google Network” of websites and apps where advertisers can display ads.

Tangent

Shares of Google parent company Alphabet have fallen nearly 1.2% on the day, decreasing to $98.63 as of 2 p.m. The company’s share price has taken a major hit since peaking at $148.93 in November 2021, part of a broader decline in tech stocks.

Further Reading

US Sues Google Over Ad Market in Escalation of Antitrust Fight (Bloomberg)

Google Antitrust: The 14 Most Explosive Allegations (Forbes)