WASHINGTON (AP) – The Justice Department and eight states filed an antitrust lawsuit against Google on Tuesday, seeking to break its alleged monopoly over the entire ecosystem of online advertising as a harmful burden on advertisers, consumers and even the U.S. government.
In the complaint, the government alleged Google wants to “neutralize or eliminate” competitors in the online advertising market through acquisitions and force advertisers to use their own products by making it difficult to use competitors’ offerings. It’s part of a new, albeit slow and steady, effort to rein in big tech companies that have enjoyed unbridled growth in the US for the past decade and a half.
“Monopolism threatens the free and fair markets on which our economy is based. They stifle innovation, hurt manufacturers and workers, and raise costs for consumers,” Attorney General Merrick Garland said at a news conference Tuesday.
For 15 years, Garland said, Google has “pursued a course of anti-competitive behavior” that has stifled the rise of competing technologies and manipulated the mechanics of online ad auctions to force advertisers and publishers to use its tools. In doing so, he added, Google was “engaging in affirmative conduct” that “severely undermines” competition in the ad tech industry, if not destroying it.
The latest government lawsuit against Google accuses the company of illegally monopolizing the way online ads are served to the exclusion of competitors. Google Ads Manager allows large publishers with significant direct sales to manage their ads. Ad Exchange, meanwhile, is a real-time marketplace for buying and selling display ads online.
Garland said Google controls the technology used by most major website publishers to offer ad space for sale, as well as the largest ad exchange that matches publishers and advertisers when ad space is sold. The result, he added, is that “website creators pay less and advertisers pay more.”
The lawsuit, filed in federal court in Alexandria, Virginia, demands that Google divest itself of its business as a buyer, seller and auctioneer of digital display advertising, keeping search — its core business — and other products and services, including YouTube, Gmail and cloud services.
Digital ads currently account for around 80% of Google’s revenue, and generally supports his other, less lucrative endeavors. But the company, along with Facebook parent Meta, has seen its market share decline in recent years as smaller rivals grab larger chunks of the online advertising market. Additionally, the overall online advertising market is cooling as advertisers cut costs and prepare for a potential recession.
Alphabet Inc., Google’s parent company, said in a statement that the lawsuit “doubles down on a flawed argument that slows innovation, raises advertising fees and makes it harder for thousands of small businesses and publishers to grow.”
Tuesday’s lawsuit comes as the U.S. government increasingly seeks to curb the dominance of Big Tech, though such legal action could take years to complete and Congress has not passed any legislation seeking to limit the influence of the tech industry’s biggest players.
The European Union has been more active. He launched an antitrust investigation It will enter Google’s digital advertising dominance in 2021. British and European regulators are also investigating whether a deal between Google and Meta for online display ad services breaks the rules. about fair competition.
The internet services trade group, which includes Google as a member, called the lawsuit and its “radical structural remedies” unfounded.
Matt Schruers, president of the Computer and Communications Industry Association, said competition for advertising is fierce and “it’s counterintuitive for governments to argue that digital ads can’t compete with print, broadcast and outdoor ads.”
Yale University fellow and adtech expert Dina Srinivasan said the lawsuit is “huge” because it unites the entire nation — state and federal governments — in a two-pronged legal attack against Google.
The current online advertising market, Srinivasan said, is “broken and completely inefficient.” The fact that middlemen get 30% to 50% of each ad trade is “crazy inefficiency baked into the US economy.” He called it “a huge tax on free internet and consumers in general.” It also directly affects the viability of the free press.”
As with most complex technical markets, it will take time for federal and state regulators and policymakers to catch up and understand the online advertising market. Srinivasan noted that it took a decade before they woke up to the dangers of high-speed trading in financial markets and started taking measures to prevent it.
Google had about 29% of the US digital ad market – which includes all the ads people see on computers. phones, tablets and other internet-connected devices – in 2022, according to research firm Insider Intelligence. Facebook’s parent company Meta is second with about 20% of the market. Amazon is a distant but growing third, up more than 11%.
Insider predicts that both Google and Meta’s ad market share will decline, while competitors like Amazon and TikTok will see gains.
This is the latest legal action against Google by either the Department of Justice or local state governments. For example, in October 2020, the Trump administration and 11 state attorneys general sued Google for violating antitrust laws and anticompetitive practices in the search and search advertising markets.
Asked why the Justice Department would file suit when similar complaints were filed by states, Assistant Attorney General Jonathan Kanter, the department’s top antitrust official, said: “We did our own investigation, and that investigation took place over many years.”
Tuesday’s lawsuit essentially aligns the Biden administration and the new states with the 35 states and the District of Columbia that sued Google in December 2020 over the same issues.
The states involved in the suit include California, Virginia, Connecticut, Colorado, New Jersey, New York, Rhode Island and Tennessee.
AP Technology Writer Ortutay reported from San Francisco and Bajak reported from Boston. AP Technology Writer Matt O’Brien contributed to this report.