The Department of Justice and a group of eight states sued google on Tuesday, accusing him of illegally abusing a monopoly over the technology that powers online advertising, in the agency’s first antitrust lawsuit against a tech giant under President Biden and an escalation in legal pressure on one of the Internet companies. biggest in the world.
The lawsuit said that Google had “corrupted legitimate competition in the ad technology industry by engaging in a systematic campaign to seize control of the wide range of high-tech tools used by publishers, advertisers and brokers to facilitate digital advertising.” ”. The lawsuit asked the US District Court for the Eastern District of Virginia to compel Google to sell its suite of ad technology products and prevent the company from engaging in allegedly anti-competitive practices.
It was the fifth antitrust lawsuit filed by US officials against Google since 2020, as lawmakers and regulators around the world try to rein in the power big tech companies wield over online information and commerce. In Europe, Amazon, Google, Apple and others have faced investigations and antitrust charges, while regulators have passed new laws to limit the harms of social media and some practices such as data collection.
In the United States, Meta, the parent company of Facebook and Instagram, was sued in 2020 over claims it illegally squashed its fledgling rivals. Google has faced particular scrutiny. In 2020, a group of states led by Texas filed an antitrust lawsuit against it related to ad tech, while the Justice Department and another group of states separately sued Google over claims it abused its dominance over search. online. In 2021, some states also sued over Google’s app store practices.
The new lawsuit “adds another major complication to Google’s efforts to deal with regulators around the world,” said William Kovacic, former chairman of the Federal Trade Commission. “There is a chance that one or more of these challenges will break through and hit the mark.”
Peter Schottenfels, a Google spokesman, said the lawsuit “attempts to pick winners and losers in the highly competitive ad-tech industry.” The lawsuit echoed the “baseless” lawsuit led by Texas in 2020, he said, adding that the latest Justice Department lawsuit made a flawed argument that would slow innovation and hurt publishers.
The Justice Department did not immediately respond to a request for comment.
The Biden administration is trying to use unusual legal theories to clip the wings of some of America’s biggest corporations. The FTC has asked a judge to block Meta from buying a virtual reality company, a rare case that argues that a deal could hurt potential competition in a nascent market. The agency has also questioned Microsoft’s purchase of video game publisher Activision Blizzard for $69 billion, a notable move because the two companies aren’t primarily seen as direct competitors.
The administration’s efforts are expected to meet fierce resistance in federal courts. Judges have for decades subscribed to the view that antitrust violations should be determined primarily based on whether they increase prices for consumers. But Jonathan Kanter, head of the Justice Department’s antitrust division, and Lina Khan, chairwoman of the FTC, have said they are willing to drop cases that allow them to push the boundaries of the law and put American companies on notice. .
Tuesday’s lawsuit describes a campaign by Google to monopolize ad technology and then abuse that domain, to the detriment of publishers, advertisers and, ultimately, consumers. The Justice Department and states, including New York and California, said Google built its monopoly by buying crucial tools that delivered ads to publishers. As a result, advertisers paid more for space on the Internet and publishers made less money, as Google took its cut, they said.
“Every time a threat has emerged, Google has used its market power in one or more of these ad-tech tools to nullify the threat,” the lawsuit says. “The result: Google’s plan to achieve lasting dominance across the industry has succeeded.”
The new lawsuit echoes claims made in the 2020 lawsuit backed by Texas and 14 other states and territories about Google’s ad technology. That lawsuit has had a mixed reception in court. In September, a federal judge in New York ruled that part of the case could go forward, but it dismissed a claim related to an agreement between Google and Facebook that the states said was anticompetitive.
Google’s search engine has long been its profit center, but the company’s ad-tech division has helped cement its place as a one-stop-shop for advertisers. The two companies together have given Google a powerful advantage in pricing online ads. Because Google’s various ad tools and platforms are tightly integrated, a forced divestment could be a painful and difficult process for the company.
Alphabet, Google’s parent company, is scheduled to report fourth-quarter financial results on February 2, amid a downturn in the online advertising market.
Google has added to its online advertising tools for years. Its $3.1 billion purchase in 2007 of DoubleClick, a maker of advertising tools, amplified the reach of its already powerful digital advertising machine. DoubleClick gave Google a crucial role on the Internet, providing a marketplace for publishers and allowing Google to host more ads on sites across the web.
At the time, Google had $16.6 billion in annual revenue, mostly from its search engine business. By 2021, the company’s ad-tech division generated $31.7 billion in revenue, making it the second-biggest business unit after the flagship search engine. Through the first three quarters of 2022, the unit posted $24.3 billion in sales.
Google has long faced accusations from online publishers that its control over the digital ad ecosystem unfairly undermined the profits of the sites where the ads are shown.
A group representing publishers, including The New York Times Company, has lobbied Congress to allow sites to collectively negotiate the terms of advertising deals with Google and other online platforms. Normally, that kind of coordination would be illegal under antitrust laws. The publishers’ efforts have so far been unsuccessful.
The Justice Department said that in addition to hurting publishers and advertisers, Google’s tight control of the ad-tech market also hurt Internet users, arguing that publishers have fewer resources to create content for visitors to their websites. websites.
On Friday, Google announced that it would lay off 12,000 employees, or 6 percent of its workforce, in response to a slowdown in the digital advertising market. The company said the cuts would allow it to prioritize projects involving artificial intelligence, an area that has accelerated in Silicon Valley in recent months.
