The US Department of Justice, along with eight states, is suing Google to break up the company’s advertising business. The agency accused Google of illegally monopolizing the digital advertising market in a complaint filed Tuesday in a federal court in Virginia.
“Google’s anticompetitive 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,” the Justice Department alleges.
“Today’s lawsuit from the DOJ attempts to pick winners and losers in the highly competitive advertising technology sector,” a Google spokesperson said.
“It largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was recently dismissed by a federal court.
“[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.”
According to Bloomberg, the lawsuit is the Biden administration’s first significant attempt to challenge the power of one of the country’s largest technology firms. In 2020, the agency previously sued Google.
The Justice Department, led by Attorney General William Barr at the time, claimed the company had a monopoly on search and search-related advertising.
It also took issue with Android terms, which the Justice Department claimed unfairly favored Google by requiring manufacturers to preload their devices with the company’s applications and search engine.
Google is under intense regulatory scrutiny because of its dominance in the digital advertising market. Texas filed a multi-state lawsuit against the company in 2020, accusing it of using its “monopolistic power to control” ad pricing.
One year later, the European Commission launched an investigation into the company’s advertising business, prompting Google to reconsider how it handles ads on YouTube. The Senate also introduced legislation last year to prohibit companies like Google from participating in more than one aspect of the digital advertising ecosystem.
“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 Justice Department says in its most recent complaint.
It accuses Google of using acquisitions to take out both “actual or potential” competitors, in addition to abusing its marketplace dominance to prevent publishers and advertisers from using competing products effectively.
“Whenever Google’s customers and competitors responded with innovation that threatened Google’s stranglehold over any one of these ad tech tools, Google’s anticompetitive response has been swift and effective,” the Justice Department alleges.
Google accused the Justice Department of “attempting to rewrite history at the expense of publishers, advertisers, and internet users” in a blog post published after news of the Justice Department’s lawsuit broke.
Google specifically objects to the Justice Department’s demand that the company spin-off AdMeld and DoubleCheck, two ad tech firms acquired more than a decade ago. “These transactions were reviewed by regulators, including the Department of Justice,” Google says.
Google also claims that competition in the ad tech sector has grown significantly in recent years. For example, the company notes Microsoft’s recent acquisition of AT&T’s former ad tech wing Xandr, which enabled Microsoft’s “landmark” advertising deal with Netflix. “The government did not contest this acquisition,” Google said.
Google also accuses the Justice Department of misrepresenting the functionality of its advertising products.
According to the company, its product stack is compatible with competing technologies, making it “easy” for publishers and advertisers to select the services they want to use. “No one is forced to use our advertising technologies; they do so because they are effective,” Google claims.
According to one estimate, Google controls up to 26.5 percent of the US digital ad market. The company’s ad unit is expected to generate $73.8 billion in US ad revenue over the next year, with search advertisements accounting for the majority of that money.
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