Friday, January 27, 2023

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

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Google risks a lawsuit from the US Department of Justice and eight states for alleged monopoly in the digital advertising market. The agency accuses the company of abusing “monopoly power” to the detriment of websites and advertisers using other advertising tools, This is evident from a lawsuit that was filed on Tuesday (PDF).

“Google’s anti-competitive behavior has created barriers to entry at artificially high levels, forced key competitors to exit the ad technology tools market, deterred potential competitors from entering the market, and marginalized and unfairly disadvantaged Google’s few remaining competitors reads the lawsuit.

It further alleges that Google’s various acquisitions enabled it to “neutralize or eliminate” competitors, claiming that it “forced” 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.” The DOJ says that Google “reaps, on average, more than 30% of the advertising dollars that flow through its digital ad technology products.”

Google knew this was coming. Last year, the company tried to avoid a potential lawsuit from the DOJ by offering to separate its ad auctions, which sells and places ads on customer websites, from Google’s digital advertising arm. But rather than making it a separate company, the move would have brought the division under the umbrella of Google’s parent company Alphabet.

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

“Google has used anti-competitive, exclusive and illegal conduct”

“Today’s complaint alleges that Google used anti-competitive, exclusive and illegal conduct to remove or severely mitigate any threat to its dominance over digital advertising technologies,” Attorney General Merrick B. Garland said in a statement. “Regardless of industry and regardless of company, the Department of Justice will vigorously enforce our antitrust laws to protect consumers, safeguard competition, and ensure economic fairness and opportunity for all.”

The DOJ sued Google in 2020 for similar reasons, accusing it of illegally monopolizing the search and advertising markets. At the time, the agency asked the court to “break Google’s hold on search distribution so that competition and innovation can prevail.” Earlier this month, Google filed a motion to dismiss a complaint from the agency alleging that Google is using its Android operating system and overall hold over the search market to further limit competition in the industry.

“Today’s lawsuit from the DOJ seeks to pick winners and losers in the highly competitive ad technology industry,” Google said in an emailed statement. The edge provided by communications manager Peter Schottenfels. “It largely duplicates one baseless lawsuit by the Texas Attorney General, much of which has been done recently turned down by a federal court. DOJ doubles down on a flawed argument that would slow innovation, increase advertising costs, and make it harder for thousands of small businesses and publishers to grow.

The DOJ’s lawsuit is part of a broader government crackdown on Big Tech’s grip. In May last year, a group of Republicans and Democrats in the Senate 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 prevent companies processing more than $20 billion a year in digital advertising transactions from participating in multiple parts of the digital advertising industry.

Update, 1:57 PM ET: Updated to add statement from Google.

Update, 2:35 p.m. ET: Updated to add additional information from the DOJ.

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