April 13, 2024


Immortalizing Ideas

Google is being sued by the US for its alleged monopoly on digital ads

Google’s facing a lawsuit from the US Department of Justice and eight states over its alleged monopoly on the digital advertising market. The agency accuses the company of abusing “monopoly power” at the disadvantage of websites and advertisers who use other advertising tools, according to a lawsuit filed on Tuesday (PDF).

“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 lawsuit reads.

It goes on to allege that Google’s various acquisitions allowed it to “neutralize or eliminate” competitors, and claims that it’s 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 responded to the lawsuit in a post on its blog and argues that the DOJ’s request for it to “unwind” two previous acquisitions from over a decade ago is an attempt to “rewrite history at the expense of publishers, advertisers and internet users.” It also says the DOJ “mischaracterizes” how its advertising products work, noting that Google doesn’t force customers to use its products and that people “choose to use them because they’re effective.” The company highlights other companies making moves in the advertising industry as well, including Microsoft, Amazon, Apple, and TikTok.

“Today’s lawsuit from the DOJ attempts to pick winners and losers in the highly competitive advertising technology sector,” Dan Taylor, Google’s vice president of global ads, writes. “It largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was recently dismissed by a federal court. 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.”

Google knew this was 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. But instead of making it a separate company altogether, the move would’ve put the division under the umbrella of Google’s parent company, Alphabet.

That and the other concessions Google reportedly offered obviously weren’t enough to convince the DOJ that it’s not engaging in anti-competitive practices. The DOJ’s lawsuit asks the court to force Google to divest its advertising businesses. Eight states, including New York, California, Connecticut, and Virginia, also signed on to the suit.

“Google has used anticompetitive, exclusionary, and unlawful conduct”

“Today’s complaint alleges that Google has used anticompetitive, exclusionary, and unlawful conduct to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” Attorney General Merrick B. Garland says in a statement. “No matter the industry and no matter the company, the Justice Department will vigorously enforce our antitrust laws to protect consumers, safeguard competition, and ensure economic fairness and opportunity for all.”

The DOJ sued Google for similar reasons in 2020, 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.” Earlier this month, Google filed a motion to dismiss a complaint from the agency that alleges Google leverages its Android operating system and general grasp on the search market to further limit competition in the industry.

This lawsuit comes as part of a wider governmental crackdown on the grasp of Big Tech. In May of last year, a group of Senate Republicans and Democrats introduced the Competition and Transparency in Digital Advertising Act. The bill could force companies like Google and Meta to divest their advertising businesses, as it would bar companies processing over $20 billion per year in digital ad transactions from partaking in multiple parts of the digital ad industry.

Update January 24th, 1:57PM ET: Updated to add a statement from Google.

Update January 24th, 2:35PM ET: Updated to add additional information from the DOJ.

Update January 24th, 3:38PM ET: Updated to add Google’s response to the lawsuit.