The Justice Department is suing Google for digital advertising dominance

WASHINGTON (AP) — The Justice Department and eight states filed an antitrust suit against Google on Tuesday, seeking to quash its alleged monopoly over the entire online advertising ecosystem as a painful burden on advertisers, consumers and even the U.S. government.

The government claimed in the complaint that Google is trying to “neutralize or eliminate” rivals in the online advertising market through acquisitions and to force advertisers to use its products by making it difficult to use competitors’ offerings. It’s part of a new, albeit slow and faltering US push to rein in big tech companies that have experienced largely unbridled growth over the past decade and a half.

Monopolies threaten the free and fair markets on which our economy is based. They stifle innovation, they hurt producers and workers, and they increase 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 slowed the rise of rival technologies and manipulated the mechanisms of online ad auctions to force advertisers and publishers to use its tools. He added that Google “engaged in exclusionary behavior” that “severely weakened” if not destroyed competition in the ad technology industry.

The lawsuit, the latest lawsuit filed by the government against Google, accuses the company of unlawfully monopolizing the way ads are displayed online by excluding competitors. Google’s ad manager helps large publishers with high direct sales manage their ads. The ad exchange, meanwhile, is a real-time marketplace for buying and selling online display ads.

Garland said Google controls the technology used by most major website publishers to list ad space for sale, as well as the largest ad exchange that brings publishers and advertisers together when ad space is sold. The result, he added, is that “website creators earn less and advertisers pay more.”

The lawsuit, filed in federal court in Alexandria, Virginia, demands that Google divest itself of the buyer, seller, and auctioneer activities of digital display advertising, and continue with search — its core business — and other products and services, including YouTube, Gmail and Cloud Services.

Digital advertising currently accounts for about 80% of Google’s revenue, and generally supports his other, less lucrative endeavors. But the company, along with Facebook’s parent company Meta, has seen its market share decline in recent years as smaller rivals take larger chunks of the online advertising market. In addition, the overall online advertising environment market is cooling as advertisers curb spending and brace for a potential recession.

Alphabet Inc., Google’s parent company, said in a statement that the lawsuit “doubles down on a flawed argument that would slow innovation, increase advertising costs and make it harder for thousands of small businesses and publishers to grow.”

Tuesday’s lawsuit comes as the US government increasingly tries to rein in Big Tech’s dominance, even though such legal action could take years and Congress has not passed any recent legislation to limit the influence of the tech industry’s biggest players. curb.

The European Union has become more active. It launched an antitrust investigation to Google’s digital advertising dominance in 2021. UK and European regulators are also investigating whether an agreement for online display advertising services between Google and Meta violates the rules to fair competition.

An internet services trade group, of which Google is a member, described the lawsuit and the “radical structural remedies” as unwarranted.

Matt Schruers, president of the Computer & Communications Industry Association, said competition for advertising is fierce and that “governments’ claim that digital advertising does not compete with print, broadcast and outdoor advertising defies reason”.

Dina Srinivasan, a Yale University fellow and adtech expert, said the lawsuit is “huge” because it aligns the entire nation — state and federal governments — in a bipartisan legal offensive against Google.

The current online advertising market, Srinivasan said, “is broken and totally inefficient.” The fact that intermediaries get 30% to 50% of the revenue from each ad transaction is “an insane inefficiency baked into the US economy.” She called it “a huge burden on the free internet and consumers in general. It also directly affects the viability of a free press.

As with many highly complex tech markets, it has taken time for federal and state regulators and policymakers to catch up and understand the online advertising market. Srinivasan noted that it took ten years for them to wake up to the dangers of rapid trading in financial markets and start taking measures to discourage it.

Google controlled nearly 29% of the US digital advertising market, including all the ads people see on computers. phones, tablets and other internet-connected devices — in 2022, according to research firm Insider Intelligence. Facebook parent company Meta is in second place, holding almost 20% of the market. Amazon is a distant but growing third at over 11%.

Insider estimates that both Google and Meta’s share of the advertising market will decline, while rivals such as Amazon and TikTok are expected to see gains.

This is the last legal action taken against Google by the Department of Justice or local state governments. In October 2020, the Trump administration and 11 attorneys general sued Google for violating antitrust laws, alleging anti-competitive practices in the search and search advertising markets.

When asked why the Justice Department would file the lawsuit when a similar complaint has already been filed by states, Assistant Attorney General Jonathan Kanter, the Department’s top antitrust official, said: “We conducted our own investigation, and that investigation revealed many took years.”

Tuesday’s lawsuit essentially aligns the Biden administration and the new states with the 35 states and district of Colombia that sued Google in December 2020 over the exact same issues.

The states participating in the lawsuit are California, Virginia, Connecticut, Colorado, New Jersey, New York, Rhode Island and Tennessee.

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AP Technology Writer Ortutay reported from San Francisco and Bajak from Boston. AP Technology Writer Matt O’Brien contributed to this report.

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