The US and eight states are suing Google for its digital ad business

“The lawsuit we have filed today seeks to hold Google to account for what we allege are its longstanding monopolies in digital advertising technologies,” said the DoJ.
25 January 2023

The US and eight states are suing Google for its digital ad business. Here’s what went down. WASHINGTON, DC – JANUARY 24: Jonathan Kanter, Assistant Attorney General for the Department of Justice Antitrust Division holds up a document as he speaks alongside U.S. Attorney General Merrick Garland (L) U.S. Associate Attorney General Vanita Gupta at a news conference at the Justice Department to announce a new antitrust lawsuit against Google on January 24, 2023 in Washington, DC. The Justice Department and states including California, New York, Colorado and Virginia, have filed a lawsuit against Google over the company’s monopolization of the market for online ads. Anna Moneymaker/Getty Images/AFP (Photo by Anna Moneymaker / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)

It is getting hard to keep up with news about Google being sued or threatened by regulators in the US or elsewhere for exerting its monopoly power in its ad business. The US is unwilling to give up in its pursuit of the multimedia world-conqueror. Just this week, the Department of Justice (DoJ) and eight US states filed the fifth challenge by the country’s officials against the tech giant, building on a case that several states filed back in 2020

This time around, US Attorney General Merrick Garland said that the Big Tech company has sought to defeat its rivals in the online advertising business using anti-competitive tactics for 15 years. The agency accuses the company of abusing “monopoly power,” to the disadvantage of websites and advertisers who use other advertising tools, according to a lawsuit filed earlier this week.

In so doing, he added, “Google has engaged in exclusionary conduct” that has “severely weakened,” if not destroyed, competition in the ad tech industry. “First, Google controls the technology used by nearly every major website publisher to offer advertising space for sale. Second, Google controls the leading tool used by advertisers to buy that advertising space. And third, Google controls the largest ad exchange that matches publishers and advertisers together each time that ad space is sold,” Garland said.

The US vs Google, again

In the lawsuit, it is stated that “Google’s anti-competitive behavior has raised barriers to entry to artificially high levels, forced key competitors to abandon the market for ad tech tools, dissuaded potential competitors from joining the market, and left Google’s few remaining competitors marginalized and unfairly disadvantaged.”

It goes on to allege that Google’s various acquisitions allowed it to “neutralize or eliminate” competitors, and claims that it has been “forcing” other companies to use its tools. According to the government’s lawyers, when you add up the alleged anti-competitive moves, “these interrelated and interdependent actions have had a cumulative and synergistic effect that has harmed competition and the competitive process.” 

Additionally, the DOJ says Google “pockets on average more than 30% of the advertising dollars that flow through its digital advertising technology products.”

Google in the US  saw this coming. Last year, the company attempted to avoid a potential lawsuit from the DOJ by offering to separate its ad auctions business, which sells and puts ads on customers’ websites, from Google’s digital advertising arm. 

Instead of making it a separate company altogether, the move would have put the division under the umbrella of Google’s parent company, Alphabet. That, and the other concessions Google reportedly offered, weren’t enough to convince the DOJ that it is not engaging in anti-competitive practices. The DOJ’s lawsuit asks the court to force Google to divest itself of its advertising businesses. Eight states, including New York, California, Connecticut, and Virginia, also signed on to the suit.

Google and its history of lawsuits in the US

Looking back, three years ago the DOJ sued Google for similar reasons, accusing it of illegal monopolization of the search and ad markets. At the time, the agency asked the court to “break Google’s grip on search distribution so that competition and innovation can take hold.” Fast forward to earlier this month, when Google filed a motion to dismiss a complaint from the DoJ that alleges Google leverages its Android operating system and general grasp on the search market to further limit competition in the industry.

Regarding the lawsuit filed yesterday, Google stated that it “largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was recently dismissed by a federal court.” Google believes that the DoJ in the US 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.”

Google also emphasized that the DoJ’s lawsuit would reverse years of innovation, harming the broader advertising sector. “The current Administration has stressed the value of antitrust enforcement in reducing prices and expanding choice for the American people. We agree. But this lawsuit would have the opposite effect, making it harder for Google to offer efficient advertising tools that benefit publishers, advertisers and the wider US economy,” it added.

Essentially, Google is of the belief that antitrust cases shouldn’t penalize companies that offer “popular, efficient services, particularly in difficult economic times.” Realistically speaking,  a resolution in the case could be years away.