On Tuesday, the Department of Justice and eight states filed a lawsuit against Google, arguing that the company’s online advertising market dominance hurts competition and should be broken up.
The new lawsuit considerably heightens the risks for Google originating from Washington, where legislators and regulators have regularly voiced concerns about the internet giant’s dominance but so far failed to implement new legislation or regulations that may rein in Google or its competitors.
Google Sued By US Department Of Justice
CNN viewed a copy of the Justice Department’s Tuesday complaint alleging that Google purposefully and illegally preserved its market dominance by engaging in an anti-competitive campaign.
The US government asserts that Google engaged in anticompetitive mergers with competitors and coerced publishers and advertisers into utilizing the company’s own ad technology solutions.
Attorney General Merrick Garland stated at a press conference on Tuesday that Google’s alleged anticompetitive behavior led to reduced ad revenues for websites and publishers as well as increased advertising expenses for marketers during a 15-year period.
Even the United States government was injured, according to the complaint, which cited the United States Army as one of several government advertisers using Google’s tools. The US government has spent $100 million on online advertising since 2019, according to the complaint.
Google, according to the US government, corrupted legal competition in the ad tech business by conducting a systematic campaign to acquire control of the vast array of high-tech tools used by publishers, advertisers, and brokers to allow digital advertising.
Google has utilized anticompetitive, discriminatory, and illegal measures to eliminate or significantly reduce any danger to its control over digital advertising technologies after inserting itself into every part of the digital advertising business.
The lawsuit was filed in the Eastern District of Virginia of the United States District Court. This is the second antitrust action filed by the federal government against Google since 2020 when the Trump administration sued Google for alleged anticompetitive harms in search and search advertising.
This proceeding is still underway. Google has also been the focus of state and private antitrust litigation. Google stated in a statement that the DOJ lawsuit attempts to select winners and losers in the highly competitive advertising technology industry.
DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it more difficult for thousands of small businesses and publishers to grow, a Google spokesperson said, adding that a federal judge dismissed a claim that Google colluded with Facebook in a separate antitrust case brought by the state of Texas last year.
Nonetheless, the judge determined that a number of monopolization arguments in the Texas case might proceed.
Read more: Google announces 12,000 job losses as the tech sector expands its layoffs
Google’s Core Ad Sales Machine
The lawsuit is a direct assault on Google’s large, core advertising business. Google produced $209 billion in advertising income in 2021, more than 80% of its overall revenue, according to its annual report.
Meta, the parent company of Facebook, was the second largest internet advertising company in 2021, generating $115 billion. Tuesday’s lawsuit targets a portion of Google’s ad revenue derived from display advertising, a $32 billion industry for the corporation.
According to estimates from a third party, Google and Facebook accounted for the bulk of digital ad income in the United States, reaching a peak in 2017 with Google capturing around a third of the market.
Since then, however, others, such as Amazon, have begun to enter the market.
Similar concerns have triggered antitrust probes in the United Kingdom and the European Union.
Google’s ubiquitous control over the whole ad tech business has been questioned by its own digital advertising executives, the complaint stated. At least one of these officials properly posed the question: Is there a deeper problem with us owning the platform, the exchange, and a massive network? The comparison would be if Goldman Sachs or Citibank bought the New York Stock Exchange.
According to Google’s own documentation, the company retains at least 30 cents of every advertising dollar that passes through its advertising tools, Kanter said, adding that the percentage may be significantly higher in other instances.
In 2020, the House of Representatives issued a 450-page report concluding that Google, Amazon, Apple, and Facebook have monopoly strength in major business sectors.
The report was the outcome of a 16-month study in which congressional staff examined business documents and interviewed several consumers and competitors in the computer industry.
It was determined, among other things, that Google was particularly positioned to capitalize on its dominant position in the internet advertising business.
Read more: Small business tech trends that will surely bring money in 2023!