Google accused of monopolizing $250B U.S. digital ad market

It is the first antitrust lawsuit against a tech company in the Biden administration, continuing an effort started by former President Donald Trump.

It’s also the latest in Google’s antitrust battle. This is the second case by the DOJ, and the second case targeting his advertising company. The DOJ and a group of state attorneys general sued in October 2020 over Google’s dominance in Internet search, and a group of state attorneys general led by Texas challenged the company- ad that year. Another case was filed by a state group led by Utah in 2021 against Google Play, a mobile application store.

“Today’s filing by the DOJ attempts to pick winners and losers in the highly competitive ad technology space,” said Google spokesman Peter Schottenfels. “Most are duplicating the frivolous lawsuits filed by the Texas Attorney General, most of which were dismissed by the federal courts. The DOJ is doubling down on false arguments that could slow innovation, raise advertising costs, and make it harder for thousands of small businesses and publishers to grow. “

Progressives applauded the case. “As the Justice Department’s lawsuit is well-founded, Google is a buyer, broker, and exchange of digital advertising with a conflict of interest,” said Matt Stoller with the American Economic Liberties Project. . “Google frequently abuses this power, distorts the market, removes all forms of competition, and instills fear throughout the marketing world.”

Filed in federal court in Virginia, which is known for its speedy decisions, the suit alleges that Google’s dominance in all aspects of online advertising, which it has partially acquired through a series of acquisitions nearly 15 years ago, it gives the company too much control over the device. used to buy, sell, and display ads. These tools are the primary source of income for most websites.

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According to data from eMarketer, a digital advertising data service, Google is the largest company in the digital advertising market which is estimated to be worth nearly $280 billion by 2023. This has risen from $250 billion to of 2022.

Google’s dominance allows the company to collect 30 cents for every dollar advertisers spend on its tools that serve ads across the web, according to Tuesday’s filing, which cites Google’s internal letter.

“Consumers and small businesses in New York are paying the price for Google’s actions,” said Attorney General Tish James. “When web publishers earn less than Google’s monopoly, they have to lower the quality of their sites, or pass the cost on to consumers.”

The new lawsuit is similar to the Texas case, which also focuses on so-called display ads, or the images, text and videos that often run on news, sports, and smaller e-commerce sites and some blogs. Google has many of the most popular tools used by advertisers and publishers to sell space and place ads online. It also owns AdX, one of the most widely used exchanges that matches advertisers and publishers in automated auctions within milliseconds it takes to load a web page.

Both the DOJ and Texas-led cases use high-speed electronic stock trading as an analogy to describe Google’s business. The case accuses Google of a conflict of interest by acting on behalf of publishers and advertisers as well as operating an electronic advertising exchange that matches the two, and sells advertising space on sites such as YouTube.

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“The analogy is if Goldman [Sachs] or Citibank owns the New York Stock Exchange,” Jonathan Kanter, head of the DOJ’s antitrust division, said Tuesday at a press conference.

Google has previously said that the online advertising market is fiercely competitive, and pointed to startups and tech giants such as Amazon, Meta and Microsoft competing in all areas.

Citing the US Army’s advertisers, including recruitment ads, Kanter said the federal government itself is the victim of Google’s behavior. This allows the agency to seek damages, something it cannot do in a civil antitrust case.

Some parts of the Texas-led case were dismissed by a federal judge in Manhattan last year, but most of the cases are still ongoing.

“In the complaint, the department alleges that Google has engaged in persistent conduct over 15 years that has had and continues to have the effect of foreclosing competitors, reducing competition, driving up advertising costs- marketing, reduces revenue for web publishers, stifles innovation and weakens the public marketplace of ideas. Kanter said during the press conference.

Google’s online advertising operations have been consolidated through a series of acquisitions, which are the focus of Tuesday’s proceedings. The DOJ case goes into more detail about Google’s acquisition history, naming specific companies it wants to sell, including Google’s ad exchange, which matches publishers and advertisers in real time. for billions of ads across the web.

The deal dates back to the 2008 acquisition of DoubleClick, which helps websites sell ad space. In 2011 it bought AdMeld, another tool used by the website. In 2010 he bought Invite Media, used by a large online advertising company, and in 2009 he acquired AdMob, a mobile advertising company.

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Through this extensive market control, DOJ said that Google can manipulate advertising prices to its advantage and direct publishers and advertisers to use its advertising tools. Google can then cut revenue, raise prices for advertisers, and reduce revenue for publishers.

However, Google supporters say the case is misguided. said Adam Kovacevich, CEO of the technology-funded Chamber of Progress. “As the technology sector and the advertising industry shed jobs, the Biden administration should find ways to support those sectors rather than destroy the rest.”

Tuesday’s suit, in the works since 2019, is the latest part of a global backlash against the market power of the world’s biggest tech companies – one of the rarest problems of recent times. In recent years it has received significant bipartisan support. Google, Apple, Facebook’s Meta and Amazon are facing investigations and lawsuits on six continents. European lawmakers have recently passed laws aimed at curbing corporate dominance and pressure is mounting in the US for Congress to pass similar legislation.

“The danger is clear,” the new complaint said. “[W]Web site developers earn less, and advertisers pay more, than they do in a market where competitive pressures are unchecked by price controls and leading to technology tools. Newer ads that may result in higher and lower transaction volume for market participants.

Josh Gerstein contributed to this report.

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