Google’s second antitrust suit brought by US begins, over online ads
DoJ accused tech giant of more monopolistic behavior a month after judge found it illegally cornered online search
A second antitrust trial pitting Google against the US Department of Justice began on 9 September, with a federal judge in Virginia hearing opening statements over whether the tech giant illegally monopolized the digital advertising industry. The case could have far-reaching implications for Google’s primary source of revenue as well as the tech industry and online publishers.
The long-awaited trial is the second major US antitrust suit against Google, after the company lost a landmark case last month that determined the company illegally monopolized the online search industry. Unlike in that trial, the justice department is seeking specific remedies in its second case, ones that would force Google to break up parts of its business and divest some of its advertising technology.
The justice department’s second lawsuit, filed in January 2023, centers around Google’s acquisition and application of digital ad tech. Website publishers looking to make money from advertising rely on this technology to act as a kind of middleman. Google’s services allow sites to sell ads on their pages and for advertisers to buy ad space that reaches potential customers, while Google takes a sizable cut of the ad dollars from both sides.
“Google’s monopolies in each of these separate markets was no accident but rather the result of a campaign to condition, control, and tax digital advertising transactions over 15 years,” the justice department said in a pre-trial filing. “This campaign was exclusionary, anticompetitive, and mutually reinforcing”.
The justice department singled out several of Google’s acquisitions to argue that the company now dominates every facet of digital advertising. Google bought the ad tech company DoubleClick in 2007 for $3.1bn, which provided the tech giant with an online marketplace for publishers looking to sell ad space. The justice department alleges that DoubleClick now controls over half the ad market for open-web display transactions. Over the next few years Google acquired two other companies, Invite Media and AdMeld, which gave it access to advertisers looking to buy ad space and the ability to connect them with publishers. These deals resulted in Google controlling both the supply and demand sides of online advertising as well as the point of exchange where those sides meet, the justice department claims.
In her opening statement, the justice department lawyer Julia Tarver Wood alleged that Google had built a “trifecta of monopolies” through its acquisitions. Google’s lawyer Karen Dunn, meanwhile, framed the government’s argument as having an antiquated understanding of how the internet works, and claimed Google was just one company among a range of serious competitors.
Although there is nothing illegal about the general model of matching websites and advertisers to target consumers, the justice department claims that Google has built a monopoly through a series of ruthless anticompetitive maneuvers. These include eliminating rivals through acquisitions or exclusionary practices that amount to wielding an illegal monopoly over the industry, according to the suit.
“One industry behemoth, Google, has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising,” the justice department wrote in its complaint.
One Google ad executive who is quoted in the government’s complaint compared the company’s business model to Goldman Sachs or Citibank owning the New York Stock Exchange.
The suit alleges that Google uses its dominance to deliberately overcharge advertisers, while keeping at least 30 cents of every dollar that flows to website publishers through its advertising technology. That windfall has resulted in the company earning tens of billions of dollars each year from its advertising technology, making up the bulk of its total revenue.
“The harm is clear: website creators earn less, and advertisers pay more, than they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative ad tech tools,” the complaint states, adding that it forces publishers to pass the costs on to the consumer through paywalls and subscriptions. It cites one of Google’s own employees who allegedly characterized the company’s position as that of an “authoritarian intermediary”.
Federal prosecutors are planning to present internal Google documents and witness testimony to support their argument. Executives from publishers including Disney, the New York Times, BuzzFeed, Vox and NewsCorp are all listed as potential witnesses to testify against Google. Founders and CEOs of ad tech companies, as well as advertisers, are also set to testify. Prosecutors will also call a long list of current and former Google employees.
Google’s defense in pre-trial filings has been to argue that refusing to deal with rival companies is not an antitrust violation and that the justice department is not correctly defining the digital ad market. The company issued a statement earlier in June calling the lawsuit “a meritless attempt to pick winners and losers in a highly competitive industry”.
Although the trial was originally slated to take place before a jury, Google managed to avoid that outcome by paying the government over $2m to settle claims that its ad tech overcharged federal agencies. Monetary damage claims usually result in jury trials, while judges decide non-monetary claims directly in antitrust cases.
The case is being heard by Judge Leonie Brinkema, an 80-year-old Bill Clinton appointee who previously oversaw the contentious trial of one of the 9/11 conspirators. Brinkema made headlines in that case when she paraphrased TS Eliot after the guilty verdict, telling the defendant that he would “die with a whimper”.
Google lost its previous antitrust trial, which focused on its dominance over the online search industry, after a federal judge ruled in August that it had built an illegal monopoly through multibillion-dollar exclusionary contracts. The company is in the process of appealing that ruling, and it’s unclear what penalties it may face.
https://www.theguardian.com/technology/article/2024/sep/09/google-antitrust-lawsuit-online-ads
Reporting by Nick Robins -Early, The Guardian, 09th September 2024