The US Department of Justice has hit Google, owned by Alphabet, with a lawsuit over allegedly monopolizing digital advertising technologies.
The DOJ, along with the Attorneys General of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia, has filed a civil antitrust complaint against Google in the U.S. District Court for the Eastern District of Virginia, a DOJ release Tuesday (Jan . January).
Google is accused of undermining competition in Internet advertising technologies through serial acquisitions and anti-competitive auction manipulation.
“For the past 15 years, Google has embarked on a course of anticompetitive and exclusionary behavior that has consisted of neutralizing or eliminating ad tech competitors through acquisitions,” the DOJ claims.
Google is using its dominance in the digital advertising markets to force more publishers and advertisers to use its products and prevent them from using competing products.
In the third quarter of 2022, Google’s advertising revenue grew to $54.48 billion from $53.13 billion in 2021, despite the slowdown in global ad spending. However, subsidiary YouTube saw its ad revenue fall 1.9% year over year to $7.07 billion, which Philipp Schindler, Alphabet’s SVP and chief business officer, attributed to “the change in user behavior.”
The DOJ claims that Google now controls the digital tool nearly all major website publishers use to sell ads on their websites and controls the dominant advertiser tool that advertisers large and small use to buy ad inventory. It also controls the largest advertising exchange, a technology that runs real-time auctions to match buyers and sellers of online advertising.
“Today’s complaint alleges that Google engaged in anti-competitive, exclusionary and unlawful conduct to eliminate or seriously reduce any threat to its dominance over digital advertising technologies,” said Attorney General Merrick Garland.
“Regardless of the industry and company, the Department of Justice will vigorously enforce our antitrust laws to protect consumers, uphold competition, and ensure economic fairness and opportunity for all.”
The lawsuit alleges that Google, on average, pockets more than 30% of the advertising revenue that flows through its digital advertising technology products.
Allegations leveled against Google include acquiring competitors to gain control of key digital advertising tools.
In 2007, Google bought internet advertising company DoubleClick for $3.1 billion, turning it into an “advertising powerhouse,” according to Google. The New York Times.
The deal was approved by the Federal Trade Commission in a 4-to-1 vote.
But in 2020, the DOJ filed antitrust lawsuits against Google for “unlawfully maintaining monopolies through anticompetitive and foreclosure practices in the search and search advertising markets.”
“Google is the gatekeeper of the monopoly on the Internet for billions of users and countless advertisers worldwide,” the DOJ said at the time.
This lawsuit is scheduled to be heard in September 2023.
The recent lawsuit, which also targets Google’s advertising dominance, focuses on digital ad technologies, collectively known as the “ad tech stack,” that website publishers rely on to sell ads. Advertisers also rely on the ad tech stack to buy ads and reach potential customers.
“Today’s complaint alleges a pervasive and systematic pattern of wrongdoing by which Google sought to consolidate market power and fend off competition in the open market,” said Assistant Attorney General Lisa Monaco.
“In the pursuit of outsized profits, Google has done great harm to online publishers and advertisers, as well as to American consumers. This lawsuit marks an important milestone in the Department’s efforts to hold major technology companies accountable for antitrust violations,” Monaco said.
Google is also accused of forcing the adoption of its tools by tying website publishers to its newly acquired tools, distorting auction competition by restricting real-time bidding on publisher inventory to its Ad Exchange, and manipulating the auction mechanics for several of its products did isolate Google from the competition and rob rivals of size.
Deputy Attorney General Vanita Gupta said: “The Department’s landmark lawsuit against Google underscores our commitment to fighting abuses of market power. We claim that Google has been using publishers’ revenue for its own profits and has penalized publishers who have been looking for alternatives. These actions have weakened the free and open Internet and increased advertising costs for corporations and the United States government, including our military.”
Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division said: “Today’s lawsuit seeks to hold Google accountable for its long-standing monopolies in digital advertising technology, which allows content creators to sell ads and advertisers to buy ads in the open use the internet.”
“Our complaint contains detailed allegations that explain how Google engaged in 15 years of ongoing behavior that has resulted – and continues to do so – in crowding out competitors, reducing competition, driving up advertising costs, increasing revenues for news publishers and content creators have been reduced and the company has been wiped out innovation and disruption to the public sharing of information and ideas.”
The latest lawsuit comes as Google parent Alphabet became the latest US tech giant to shed jobs amid the global economic slowdown.
Reuters reports, citing an employee memo by Alphabet CEO Sundar Pichai on Friday (January 20), that Alphabet is cutting 12,000 jobs, or about 6% of its workforce worldwide.
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