The Department of Justice is suing Google over its dominance in the online advertising market


The Justice Department and eight states sued Google on Tuesday, accusing the company of harming competition with its dominance of the online advertising market and calling for it to be broken up.

The move marks the Biden administration’s first antitrust case against Big Tech. The eight states that joined the lawsuit include California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia.

The new complaint dramatically escalates the risks to Google from Washington, where lawmakers and regulators have raised concerns about the tech giant’s power but have so far failed to pass new legislation or regulations that might rein in the company or its peers.

For years, critics of Google have claimed that the company’s extensive role in the ecosystem that enables advertisers to place ads, and for publishers to offer digital ad space, is a conflict of interest that Google has exploited anticompetitively.

On Tuesday complaint, a copy of which was seen by CNN, the Justice Department alleged that Google actively and illegally maintained such dominance by engaging in a campaign to thwart competition. The US government has said that Google has acquired competitors through anti-competitive mergers, and has robbed publishers and advertisers of using the company’s proprietary advertising technology products.

As part of the lawsuit, it called on the US government to break up Google and asked the court to order the company to relinquish at least its online ad exchange and ad server to publishers, if not more.

The US government has alleged that Google has “subverted legitimate competition in the advertising technology industry by engaging in a systematic campaign to control a wide range of high-tech tools used by publishers, advertisers, and intermediaries, to facilitate digital advertising.” After Google inserted itself into all aspects of the digital advertising market, used non-competitive, exclusionary and illegal means to eliminate or severely reduce any threat to its dominance in digital advertising technologies.

The lawsuit was filed in the US District Court for the Eastern District of Virginia.

Tuesday’s lawsuit marks the second antitrust lawsuit the federal government has filed against Google since 2020, when Google was sued The Trump administration sued About the alleged harms of competition from Google in search and search advertising. This issue is still going on. Google has also been the target of antitrust litigation by both government and private entities.

Google said in a statement that the Justice Department’s lawsuit “attempts to pick winners and losers in the fiercely competitive advertising technology sector.”

“The Department of Justice is doubling down on a flawed argument that will slow innovation, raise advertising fees, and make it difficult for thousands of small businesses and publishers to grow,” said a Google spokesperson, adding that a federal judge last year rejected an allegation that Google colluded with Facebook in a lawsuit. Separate antitrust led by the State of Texas. However, this judge also ruled that a number of the monopoly claims in the Texas case could go forward.

The lawsuit is a direct attack against Google’s huge core advertising business. Google made $209 billion in ad revenue in 2021, according to it Annual Report, a figure that represents more than 80% of its total revenue. By comparison, the second largest giant in online advertising, Facebook’s parent company Meta, was created $115 billion in 2021.

Third party estimates Suggest Google and Facebook account for the majority of digital ad revenue in the US, peaking around 2017, when Google captured about a third of the market. However, since then, others, including Amazon, have begun to encroach on this business.

The US complaint reflects the concerns that prompted similar antitrust investigations into the US United kingdom And in European Union.

The Justice Department alleged Tuesday that Google not only controls the platform that platform publishers use to sell ad inventory online, but also the advertising tools marketers use to claim inventory and the exchange that facilitates those transactions.

“Google’s pervasive power over the entire advertising technology industry has been called into question by its digital advertising managers,” the complaint reads.[I]Is there a deeper problem with our ownership of the platform, the exchange, and a huge network? The analogy would be if Goldman or Citibank owned the New York Stock Exchange.”

Tuesday’s complaint marks an opening salvo against big tech companies by the Justice Department’s antitrust chief, Jonathan Kanter. Kanter has been out for months Lay the foundation To launch a broader attack on the most dominant companies in the tech industry, reflecting commitments by President Joe Biden and others in the US government to hold powerful companies to account. Under Kanter, antitrust officials at the Justice Department pushed for more cases to go to trial as well as prosecute cases involving unorthodox legal theories.

In 2020, House lawmakers fired 450-page report It found that Google, along with Amazon, Apple and Facebook, has “monopoly power” in key business sectors. The report was the result of a 16-month investigation during which congressional staff reviewed company documents and interviewed numerous customers and competitors in the tech industry. It concluded, among other things, that Google was uniquely positioned to capitalize on its powerful role in the online advertising industry.

“With a significant share of the ad exchange market and ad intermediary market, and as a leading supplier of ad space, Google simultaneously acts on behalf of publishers and advertisers, while also trading for itself,” the report said.

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