On Monday, Google and the Justice Department will begin their second antitrust trial of the year. The tech giant lost the last case, which was about monopolistic practices in online search. Now the DOJ is accusing the company of using its adtech to create a monopoly. That trial begins Monday.
“Having inserted itself into all aspects of the digital advertising marketplace, Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” the DOJ said when it filed the lawsuit.
Dig deeper: Antitrust bill could force Google, Facebook and Amazon to shutter parts of ad business
At the heart of the case is Google’s operating products for publishers and advertisers. The DOJ and 17 state attorneys general say that by tying its tools for publishers and advertisers together, those products let the company dominate the digital advertising market. Google has denied the claims, saying it is not required to share technological advantages with rivals and that its products are interoperable with those of competitors.
The Justice Department alleges that Google controls 91% of the market for ad servers, where publishers offer ad space, more than 85% of the market for ad networks, which advertisers use to place ads, and over half of the market for ad exchanges.
Market share is the first thing courts consider when determining if a monopoly exists. While having a 50% market share can mean there is a monopoly, judges generally require at least a 60% to 65% market share. However, it is entirely legal to have that much of a market if it is from having a better product than the competition.
Hard to determine
It’s not a simple issue, and people in the industry say it’s hard to know if Google is wrong.
“Even though I didn’t know all the mechanics that well in the search trial, my read on it was Google is screwed here,” said a senior online publishing executive who asked to remain anonymous. “In this case, I know the mechanics very well and understand this market and I’m more fuzzy about it. For me, the challenge is where is the line between what is normal competitive behavior and what is anti-competitive behavior?”
The United Kingdom today said it is anti-competitive behavior. The Competition and Markets Authority ruled “that Google is using anti-competitive practices in open-display ad tech.” While this ruling has no legal authority in the U.S., it is not a good omen for Google.
The wrong remedy for the problem?
The DOJ suit seeks to force the tech giant to eliminate its ad businesses and stop the company from engaging in allegedly anticompetitive practices. Those businesses are key to the more than 75% of Google’s $307.4 billion in revenue last year that came from advertising.
However, publishers worry that the remedy would do far more harm than good.
“The requested remedy is for Google to be forced to sell off Google Ad Manager (GAM) and AdX which sounds good,” the executive said. The problem is the impact this would have on DV360 which is “an underlying [programmatic advretising] source that gets the publishers…40% plus of their revenue.”
Dig deeper: Why Google lost: The DoJ’s case in 11 slides
Google gets a 20% cut out of ads going from DV360, which is free to use, to AdX. “Without AdX there’s no incentive for Google to spend on DV360 anymore, which the publishers need to survive,” he said. So, while the proposed remedy might end the alleged monopoly, it could wind up causing a lot of harm to others.
Who will get to testify
In August, Google filed a motion to block testimony from government witnesses who aren’t economists or antitrust experts. In its brief, the company said, “None of these third-party competitor witnesses has the proper foundation of knowledge, expert qualifications or done the required economic analysis to opine as to whether Google is a monopolist whose conduct harmed competition.”
These witnesses include the biggest names in the industry: AppNexus founder Brian O’Kelley — called the godfather of programmatic advertising — Index Exchange CEO Andrew Casale, OpenX CEO John Gentry, Vox CRO Ryan Pauley, The Trade Desk CRO Jed Dederick and many others.
Regardless of that, the publishing industry exec said the first days of the trial will say a lot about Google’s fate.
“We’ve already seen Google try a bunch of legal maneuvers that the judge has slapped down,” he said. “So we have little bit of a data point here about their perspective on things. In the first couple of days, we’ll find out more about the attitude of the judge [toward both sides].”
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**U.S. Government Launches Second Legal Battle Against Google, Focusing on Digital Advertising Practices**
In a significant escalation of its regulatory efforts, the U.S. government has launched a second major antitrust lawsuit against Google, this time targeting the tech giant’s dominance in the digital advertising market. Filed by the Department of Justice (DOJ) in January 2023, this lawsuit marks a pivotal moment in the ongoing scrutiny of Big Tech, as regulators seek to curb the monopolistic practices of some of the world’s largest technology companies. The case comes on the heels of a separate antitrust lawsuit filed in 2020, which focused on Google’s search engine dominance.
### Background: Google’s Digital Advertising Empire
Google, a subsidiary of Alphabet Inc., is a dominant player in the digital advertising ecosystem, controlling a vast portion of the technology that powers online ads. The company operates a complex network of ad services, including the Google Ads platform, Google Ad Manager, and the DoubleClick ad exchange. These services allow Google to act as a broker between advertisers and publishers, while also selling its own ad space on platforms like YouTube and Google Search.
According to industry estimates, Google controls roughly 30% of the global digital advertising market, which was valued at over $600 billion in 2022. In the U.S. alone, Google’s share of the digital ad market is even higher, making it a central player in the online advertising ecosystem. The company’s reach extends across multiple layers of the ad supply chain, from ad creation and placement to the auctioning and delivery of ads.
### The DOJ’s Allegations
The DOJ’s lawsuit alleges that Google has engaged in anticompetitive practices to maintain its dominance in the digital advertising market. Specifically, the government accuses Google of using its market power to stifle competition, manipulate ad pricing, and unfairly disadvantage rival ad tech companies. The lawsuit claims that Google’s control over key parts of the ad tech stack allows it to extract higher fees from advertisers and publishers, while limiting the ability of competitors to innovate or gain market share.
One of the central allegations is that Google has used its acquisitions of companies like DoubleClick (acquired in 2008) and AdMeld (acquired in 2011) to cement its dominance in the ad tech market. By integrating these services into its broader advertising ecosystem, Google allegedly created a “walled garden” that locks in advertisers and publishers, making it difficult for them to use competing services.
The DOJ also highlights Google’s alleged use of exclusionary contracts and other business practices that limit the ability of rivals to compete. For example, the lawsuit points to Google’s requirement that publishers use its ad tools in order to access certain premium ad inventory, effectively forcing them to rely on Google’s services.
### The Broader Context: Antitrust Scrutiny of Big Tech
The lawsuit against Google is part of a broader effort by the U.S. government to rein in the power of Big Tech companies, which have come under increasing scrutiny in recent years. In addition to Google, companies like Amazon, Apple, and Meta (formerly Facebook) have faced antitrust investigations and lawsuits related to their market dominance and business practices.
The first antitrust lawsuit against Google, filed by the DOJ in 2020, focused on the company’s dominance in the search engine market. That case, which is still ongoing, alleges that Google has used its control over search to stifle competition and maintain its monopoly. The new lawsuit, however, shifts the focus to Google’s role in the digital advertising market, which is a key source of revenue for the company.
The Biden administration has made antitrust enforcement a priority, with officials like Lina Khan, the chair of the Federal Trade Commission (FTC), and Jonathan Kanter, the head of the DOJ’s Antitrust Division, taking a more aggressive stance on regulating Big Tech. Both Khan and Kanter have been vocal critics of the concentration of power in the tech industry, arguing that it harms consumers, stifles innovation, and undermines competition.
### Google’s Response
In response to the lawsuit, Google has strongly denied the allegations, arguing that its digital advertising tools benefit both advertisers and publishers by making it easier to buy and sell ads. The company claims that its ad services help small businesses reach customers more effectively, while providing publishers with a steady stream of revenue.
Google also contends that the digital advertising market is highly competitive, with companies like Meta, Amazon, and Microsoft all vying for market share. The company argues that its success in the ad market is a result of innovation and efficiency, rather than anticompetitive behavior.
In a blog post responding to the lawsuit, Google stated: “The DOJ’s lawsuit attempts to pick winners and losers in the highly competitive advertising technology sector. It largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was recently dismissed by a federal court. We will vigorously defend ourselves against these bas
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