WASHINGTON (AP) — The Justice Department and eight states filed an antitrust lawsuit against Google on Tuesday, seeking to break its monopoly on the entire ecosystem of online advertising as a burden that harms advertisers, consumers and even the U.S. government.
The government is accused of this complaint Google hopes to “neutralize or eliminate” competitors in the online advertising market through acquisitions and make it harder for advertisers to use competitors’ offerings. It’s a new part of America’s drive to rein in big tech companies, which have enjoyed 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, they hurt producers and workers, and they drive up costs for consumers,” Attorney General Merrick Garland said at a news conference Tuesday.
For 15 years, Garland said, Google “followed a pattern of anti-competitive behavior” that stifled the development of competing technologies and manipulated the dynamics of online ad auctions to force advertisers and publishers to use its tools. By doing so, he added, Google “engaged in exclusionary conduct” that “severely weakened” competition in the ad tech industry.
The lawsuit, the latest legal action the government has brought against Google, accuses it of illegally monopolizing online advertising to the exclusion of competitors. Google’s Ads Manager allows large publishers with significant direct sales to manage their ads. Ad Exchange, meanwhile, is a real-time marketplace for buying and selling online display ads.
Garland said Google controls the technology used by most major website publishers to offer advertising space for sale and the largest ad exchange that matches publishers and advertisers together when advertising space is sold. As a result, “Web developers earn less and advertisers pay more,” he added.
The suit, filed in federal court in Alexandria, Virginia, demands that Google divest itself of the businesses of buying, selling and auctioning digital display ads, remaining with search — its core business — and other products and services, including YouTube, Gmail and cloud services.
Digital ads currently account for 80% of Google’s revenue, and heavily support its other, less profitable ventures. But along with Facebook’s parent company Meta, it has seen its market share decline in recent years as smaller rivals grab large chunks of the online advertising market. Beyond that, the overall online advertising environment is cooling the market as advertisers cut back on spending and the prospect of a recession.
Google’s parent company, Alphabet Inc., said in a statement that the lawsuit “doubles down on a flawed argument that slows innovation, drives up advertising costs and makes growth difficult for thousands of small businesses and publishers.”
Tuesday’s lawsuit comes as the U.S. government increasingly tries to rein in the dominance of Big Tech, although such legal action could take years to complete and Congress has not passed any recent legislation limiting the influence of the tech industry’s biggest players.
The European Union is still active. This started a hopeless investigation Google’s Digital Advertising Domination in 2021 British and European regulators are also investigating whether a deal between Google and Meta for online display advertising services violates the rules In fair competition.
The Internet Services Trade Group, which includes Google as a member, described the lawsuit and its “extreme structural solutions” as unfair.
Matt Schreuers, president of the Computer & Communications Industry Association, said that competition for advertising is fierce and that “governments’ argument that digital advertising is not competitive with print, broadcast and outdoor advertising defies reason.”
Tina Srinivasan, a Yale University fellow and adtech expert, said the case was “huge” because it united the entire nation — state and federal governments — in a two-pronged legal attack against Google.
The current online advertising market, says Srinivasan, “is Broken and completely useless.” The fact that middlemen get 30% to 50% of every ad trade is “a crazy inefficiency baked into the American economy.” He calls it “a free internet and a massive tax on consumers. This directly affects the credibility of a free press.
As with many more complex technology markets, it took time for federal and state regulators and policymakers to catch up and understand the online advertising market. Srinivasan noted that they took a decade to recognize the dangers of high-speed trading in financial markets and began taking measures to discourage it.
Google holds nearly 29% of the US digital ad market – which includes all the ads people see on computers. Phones, tablets and other Internet-connected devices — by 2022, according to research firm Insider Intelligence. Facebook parent company Meta is in second place, with nearly 20% of the market. Amazon is a distant but growing third with more than 11%.
The insider estimates that Google and Meta’s share of the ad market will decline, while rivals such as Amazon and TikTok are expected to see gains.
This is the latest legal action taken against Google by the judiciary or local state governments. For example, in October 2020, the Trump administration and 11 state attorneys general sued Google for violating antitrust laws, alleging anticompetitive practices in the search and search advertising markets.
Asked why the Justice Department was bringing the case when a similar complaint had already been filed by the states, Assistant Attorney General Jonathan Kanter, the department’s top antitrust official, said, “We conducted our own investigation, and the investigation went on for years.”
Tuesday’s lawsuit essentially aligns with the Biden administration and the new 35 states and the District of Columbia that sued Google in December 2020 over the same issues.
The states participating in the lawsuit are California, Virginia, Connecticut, Colorado, New Jersey, New York, Rhode Island and Tennessee.
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AP technical writer Ortutay reported from San Francisco and Bajak from Boston. AP technology writer Matt O’Brien contributed to this report.
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