DOJ sues Google for ad dominance, wants to break up company

This has been expected for some time, but today the Justice Department and eight states are suing Google over its alleged dominance of the online advertising market. The government has issues with Google’s stance on “ad tech”or the tools used to automatically match advertisers with website publishers. Apparently to address this issue, the Justice Department has told Google that it is considering splitting the company.

“Today’s complaint alleges that Google used anticompetitive, exclusionary, and illegal actions to eliminate or seriously reduce any threat to its dominance of digital advertising technology,”Attorney General Merrick Garland said in a statement. “Regardless of industry and company, the Department of Justice will actively enforce our antitrust laws to protect consumers, protect competition, and ensure economic fairness and opportunity for all.”

The press release provides a summary of the Department of Justice’s list of Google’s anti-competitive behavior:

• Acquiring competitors: Participating in an acquisition scheme to gain control of key digital advertising tools used by website publishers to sell advertising space;
• Forcing Google Tool Adoption: Tying website publishers to their newly acquired tools by limiting its unique, mandatory advertiser demand for its ad exchange and in turn conditionalizing effective real-time access to its ad exchange to its publisher’s use. ad server;
• Distorting auction competition: limiting real-time bidding on a publisher’s inventory by its ad exchange and limiting the ability of competing ad exchanges to compete on the same terms as Google’s ad exchange; And
• Auction Manipulation: Manipulating auction mechanics in several of their products to insulate Google from competition, deprive competitors of scale, and halt the development of competing technologies.

Google is the largest digital advertising broker in the US, but not by much. Axios reported that Google accounted for 28.8% of all US digital ad spend, followed by Meta at 19.6%. Many other companies such as Amazon, TikTok, Spotify, and Apple also have growth potential, but for now, these companies tend to focus only on their specific platforms.

However, the Department of Justice is not concerned about overall market share, but about the market share of individual tools used by publishers and advertising companies. On the “selling side”(from websites that have ad space for sale like this one), the Department of Justice says Google’s “DoubleClick for Publishers”ad server has over 90 percent of the market. In terms of “buyers”(advertisers looking to place their ads), the market share of the Google Ads Network for small businesses is 80%, while Display & Video 360 for large ad agencies is 40%. percentage market share. The Google Ad exchange, which matches sellers and buyers, has a 50 percent market share.

Regarding the ruling, the Justice Department says, “In order to correct Google’s anti-competitive behavior, the Department is seeking both fair damages on behalf of the American public and triple damages for federal government agencies that overpaid for online advertising.”marks the first monopolization case in nearly half a century in which the Department sought damages for a civil antitrust violation.”In essence, he wants Google to return the money.

Google published a blog post stating that it disagrees with the government’s latest antitrust lawsuit. After the usual chatter that the market is more competitive than the plaintiff thinks, he adds a new threat that is not mentioned in the press release: “The Department of Justice is demanding that we cancel two acquisitions that were considered by US regulators 12 years ago. ago (AdMeld) and 15 years ago (DoubleClick). In an effort to reverse these two acquisitions, the Justice Department is trying to rewrite history at the expense of publishers, advertisers and Internet users.”

It’s hard to believe that Google will ever fall apart. We hear threats quite often, but the last time the government broke up a company was almost 40 years ago. Then the Bell Systems telephone company was split into what would become AT&T, Verizon, and Lumen Technologies/CenturyLink/Qwest. The desire of the US government to regulate companies has since diminished significantly, and today the threat is usually only the starting point of negotiations.

Ahead of that lawsuit last year, Google told the Justice Department it was ready to “split”the advertising business, transferring one division from Google to parent company Alphabet. It’s a move that seems barely noticeable when Google and Alphabet have the same CEO, CFO and stock ticker and they all share the same (very large) pile of money.