The US Department of Justice on . Tuesday filed its second antitrust case against Google in over two years. It’s the latest sign that the U.S. government isn’t backing down from . lawsuits against tech firms even in light of its mixed court record in antitrust cases.
Shares of Google fell 1.3% on Tuesday afternoon.
The lawsuit, which focuses on Google’s online advertising business and seeks to make . Google part of the business, is the first filed against the company under the. Biden administration. The department’s previous lawsuit, filed under the Trump administration in . October 2020, accused Google of using its alleged monopoly power to . Stifle competition in internet search through exclusionary agreements. The case is expected to go to trial in September.
Google’s advertising business . Generated $54.5 billion in revenue from search, YouTube, Google . Network ads and other ads in the quarter ended Sept. 30.
Google faces three other . Antitrust lawsuits from a large group of state attorneys general. Iincluding one focused on its . Advertising business, led by Texas Attorney General Ken Paxton.
The states of California. Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and . Virginia joined the DOJ in the latest lawsuit.
Google’s ad business has drawn critics. Because the platform operates on many sides of . The market — buying, selling and an ad exchange — giving it unique insight into. The process and potential leverage. The company has long denied that it dominates the online advertising market. Pointing to the market share of competitors including Facebook.
In its lawsuit, the Justice . Department and the states argued that Google wanted to control all aspects of the market. Realizing that “it could become the ‘be-all and end-all location’ for serving all ads.”
“Google no longer has to compete on merit; It can only set the rules of the game to exclude rivals,” they alleged.
According to the complaint, even one of. Google’s own advertising executives questioned the knowledge of. Google’s extensive ownership in the space.
“[I]t’s a deep problem with us owning platforms, exchanges and a huge network?” asked the executive officer. “The analogy would be if Goldman or Citibank owned the NYSE.”
The downside of Google’s practices. They allege, is that “website creators earn less and advertisers. Pay more, in a market where relentless competitive . Pressures can drive prices down and more innovative ad technology tools . That lead to higher will result in quality. and lower transaction costs for market participants.”
As a result, they added. More publishers are forced to turn to alternative models such as . Subscriptions to finance their operations.
Another part of Google’s strategy. The complaint alleges, is to get other companies to increase. Its power in the advertising market and “set the stage for . Google’s next exclusionary behavior in the ad tech industry.” These acquisitions included . The 2008 buy of publisher ad server DoubleClick and a “nascent ad exchange” that would become . Google’s AdX. This allows Google to use all its tools to gain access to one, rather. Than working with competing tools for parts of. The online ad-buying process for publishers in some cases.
In effect. Google was robbing Peter (advertisers) to pay Paul (publishers), while collecting a . Hefty transaction fee for its own privileged position in the middle . The enforcers alleged. “Instead of helping finance . Website publishing, Google was siphoning off advertising dollars for itself by . Charging super-competitive fees on its platforms. A rival publisher ad server could not compete with Google’s inflated ad prices. Especially without access to Google’s captive advertiser demand from Google Ads.”
Google continued to identify potential . threats to its dominance, the complaint alleged, when yield . Management tools became available to help publishers . Find better prices for their inventory in real-time outside of Google’s ecosystem.
“So, in response, Google employed a. Familiar strategy: get, then extinguish, any competitive threat. The plaintiffs wrote, pointing to Google’s 2011 acquisition of yield manager AdMeld. After the deal, they allege, Google changed its . AdX agreements to prevent publishers from using. Other platforms to force its own exchange to compete with others in real-time.
Later, Google became aware of another attempted solution called “header bidding. Where publishers could add code to their own websites to allow non-Google ad . Exchanges to bid for inventory before. Google’s ad exchange preferences were triggered, pushing ad exchange . Rivals back into the market. lets come in a significant way. Google
