The US Department of Justice and eight states announced this on Tuesdayclaiming it was abusing its monopoly position to the detriment of both advertisers and publishers.
The DOJ’s complaint – which you can read in full below – was filed in federal court in Virginia. It claims that Google has “corrupted legitimate competition in the ad technology industry” by taking control of online advertising systems and “inserting itself into all aspects of the digital advertising market”. Google reportedly did this by eliminating competition through acquisitions and exploiting its dominance to push advertisers to use its products over others. The lawsuit names only Google as a defendant and no individuals. It also calls on Google to sell some of its ad technology business.
The Justice Department also said Google penalizes websites that “dare to use competing ad technology products” and uses its dominance in ad technology to “drive more transactions to its own ad technology products, where it raises fees that are too high to line its own pockets with the ten at the expense of the advertisers and publishers it allegedly serves.”
The case is the latest example of government efforts to rein in Big Tech. The most financially successful companies in the world have enormous power over our lives and over companies around the world.
Google rejected the allegations.
“Today’s lawsuit from the DOJ seeks to pick winners and losers in the highly competitive ad technology industry,” Google advertising chief Dan Taylor said in a blog post. The Justice Department lawsuit is largely a duplicate of a “baseless lawsuit” brought by Texas Attorney General Ken Paxton that was dismissed in federal court, Google argued. The Justice Department’s case is flawed and will “slow down innovation, increase advertising costs and make it harder for thousands of small businesses and publishers to grow,” Taylor said.
The Justice Department did not respond to a request for comment.
While there are some similarities to the Texas case, the Justice Department conducted its own years-long investigation that found Google maintained “numerous monopolies,” Assistant Attorney General Jonathan Kanter said at a news conference Tuesday.
The Justice Department lawsuit is a rare case in which the Department has called for the breakup of a major corporation. Other examples include the confrontations with mainframe maker IBM in the 1970s, telephone giant AT&T in 1982 and Windows maker Microsoft in 2000.
It’s because governments around the world want to curb Big Tech. The U.S. Senate has been considering over the past year whether theto curb the influence of Amazon, Apple and Google on digital marketplaces. Last year Google was and agreed to one .
Kanter said Google’s dominance in digital advertising is the equivalent of banking firms like Goldman Sachs or Citibank owning the New York Stock Exchange. Google has engaged in this behavior for 15 years, which inflates advertising costs, reduces website revenue, stifles innovation and “squashes our public marketplace of ideas,” he said. Kanter also claimed that Google’s conduct harmed the US government and military.
Among examples of alleged abuse, Kanter said Google:
- Linking schemes used to lock content creators into Google’s system.
- Manipulated ad auctions by giving themselves first-look and last-look advantages over the bidding process.
- Blocked websites for using rival technology and penalized those who tried.
- Collected and used bidding data from rivals.
Kanter also used information from Google’s documents and employees to make an argument for the company’s dominance:
- A Google employee said the company’s ad exchange is an “authoritarian middleman.”
- Senior executives said switching ad servers is “a nightmare” for publishers that “requires an act of God”.
- A Google executive said, “Our goal should be all or nothing. Use Google’s ad exchange or don’t access our advertisers’ demand.”
- A Google employee said the company “overcharged” advertisers $3 billion a year, passing the money to publishers to get them to stick with Google’s ad technology.
- A Google executive has taken detailed steps to “dry out” rivals.
The Computer and Communications Industry Association, a technology lobby group, sided with Google despite some previous support for “appropriate” government action: “We find this lawsuit and the radical structural remedies it proposes unwarranted. Digital services compete fiercely for screen advertising dollars of all sizes, and the complaint does not seem to take into account these dynamics as well as the macro trends of the global advertising market,” the group said in a statement.
This is the second antitrust suit brought against Google by the Justice Department, but the first from the Biden administration. Afiled during the Trump administration alleged that Google was blocking competitors by making deals with Apple and Samsung to become the default search engine on their devices.
Google is also confronted, along with 16 states and territories, claimed the search giant partnered with Facebook to give the social network an advantage in online ad auctions. The Justice Department may also sue under the Clayton Antitrust Act if the federal government believes it has been harmed.
Last year, Google tried to fend off the Justice Department lawsuit byaccording to The Wall Street Journal.
CNET’s Stephen Shankland contributed to this report.