This is the first major antitrust lawsuit against a tech company in the Biden administration, continuing efforts begun under former President Donald Trump.
It’s also the latest in a series of antitrust lawsuits against Google. This is both the DOJ’s second case and the second targeting its advertising business. The DOJ and a group of state attorneys general sued Google’s dominance in web searches in October 2020, and a Texas-led group of attorneys general challenged its advertising activities later that year. Another case was filed by a group of states led by Utah in 2021 on Google Play, its mobile app store.
“Today’s lawsuit by the DOJ attempts to pick winners and losers in the highly competitive ad-tech industry,” Google spokesman Peter Schottenfels said. “This largely replicates an unsubstantiated lawsuit by the Texas Attorney General, much of which was recently dismissed in federal court. The DOJ is doubling 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.
Progressives applauded the case. “As the Justice Department lawsuit meticulously documents, Google is a digital advertising buyer, broker and exchange with pervasive conflicts of interest,” said Matt Stoller of the American Economic Liberties Project. “Google routinely abuses this power, manipulating markets, beefing up all forms of competition, and instilling fear in the retail landscape.”
Filed in a federal court in Virginia known for its quick resolutions, the lawsuit argues that Google’s dominance in all facets of online advertising, which it has achieved in part through a series of acquisitions dating back nearly 15 years, gives the company too much control over the tools. used to buy, sell and display advertisements. These tools are the main source of income for much of the web.
According to data from eMarketer, a digital advertising data service, Google is the largest company in the digital advertising market, which is estimated to be worth nearly $280 billion in 2023. That’s up from $250 billion. billion dollars for 2022.
Google’s dominance allows the company to collect 30 cents for every dollar advertisers spend through its tools that place ads on the web, according to Tuesday’s case, which cites internal Google documents.
“New York consumers and small businesses are paying the price for Google’s stock,” Attorney General Tish James said. “When website publishers receive less advertising revenue due to Google’s monopolies, they either have to reduce the quality of their website or pass the costs on to consumers.”
The new lawsuit is similar to the Texas case, which also focuses on what is known as display advertising, or the images, text and videos that are often shown on news, sports, smaller e-commerce and some blogs. Google has many of the tools most widely used by advertisers and publishers to sell space and place ads online. It also owns AdX, one of the most widely used exchanges that matches advertisers and publishers in automatic auctions that occur within the milliseconds it takes to load a webpage.
The cases run by the DOJ and Texas use high-speed electronic stock trading as an analogy to describe Google’s business. The cases accuse Google of conflicts of interest by working on behalf of publishers and advertisers as well as operating the major electronic advertising exchange that matches both and selling its own ad space on sites like YouTube.
“The analogy would be if Goldman [Sachs] or Citibank owned the New York Stock Exchange,” Jonathan Kanter, head of the DOJ’s antitrust division, said Tuesday at a press conference.
Google has previously said the online advertising market is fiercely competitive and pointed to a number of startups and tech giants like Amazon, Meta and Microsoft all competing in the industry.
Citing the US Army an advertiser, including for recruiting ads, Kanter said the federal government itself is a victim of Google’s conduct. This allows the department to seek damages, which it is generally unable to do in civil antitrust cases.
Parts of the Texas-led case were thrown out last year by a federal judge in Manhattan, but much of the case continues.
“In the complaint, the department alleges that Google has engaged in 15 years of sustained conduct that has had and continues to have the effect of driving out rivals, diminishing competition, inflating advertising costs, reducing revenue website publishers, to stymie innovation and flatten our public marketplace of ideas,” Kanter said at the press conference.
Google’s online advertising operations have been largely replenished through a series of acquisitions, which is a key part of Tuesday’s deal. The DOJ case gives more extensive details about Google’s acquisition history, calling out specific companies it wants to sell, including Google’s ad exchange, which connects publishers and advertisers in real time. for the billions of ads on the web.
The deals date back to Google’s acquisition of DoubleClick in 2008, which helps websites sell ad space. In 2011, he purchased AdMeld, another tool used by websites. In 2010 it bought Invite Media, used by large companies to place online advertisements, and in 2009 it acquired mobile advertising company AdMob.
Through this extensive market control, the DOJ said Google is able to manipulate advertising prices to its advantage and incentivize publishers and advertisers to use its advertising tools. Google is then able to take an inordinate share of the money, increasing costs for advertisers and reducing revenues for publishers.
Google supporters, however, called the case misguided. “Google’s online advertising market share is now at an all-time low, and Google just laid off 12,000 employees amid a declining advertising market. So this DOJ case seems quite disconnected from economic reality. “. said Adam Kovacevich, CEO of the tech-funded Chamber of Progress. “As the tech sector and the advertising industry cut jobs, the Biden administration should look for ways to support these sectors rather than undermine what’s left.”
Tuesday’s lawsuit, ongoing since 2019, is just the latest in a global backlash against the market power of the world’s biggest tech companies – one of the few issues in recent years to garner broad bipartisan support. . Google, Apple, Meta’s Facebook and Amazon are being investigated and sued on six continents. European lawmakers recently passed legislation aimed at curbing corporate dominance, and pressure is mounting in the United States for Congress to pass similar laws.
“The harm is clear,” states the new complaint. “[W]Website builders earn less and advertisers pay more than they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative advertising technology tools that would ultimately result in better quality and lower cost transactions for market participants.
Josh Gerstein contributed to this report.