DOJ targets Google’s online ad monopoly in latest Big Tech lawsuit

by Jacob Fuller

The U.S. Justice Department sued Alphabet’s Google on Tuesday, accusing the company of abusing its dominance of the digital advertising business and said Google should be forced to sell its ad manager suite, in the government’s latest jab at thwarting Big Tech’s market power.

The lawsuit tackles a business at Google that is responsible for 80% of its revenue. The Justice Department asked the court to compel Google to break up its ad technology business.

“Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” the antitrust complaint said.

Google responded to the lawsuit, saying the government was “doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.”

The federal government has said it is trying to level the playing field for rivals to Big Tech companies including Amazon.com, Facebook owner Meta Platforms, and Apple Inc.

Tuesday’s lawsuit by the administration of President Joe Biden, a Democrat, follows a 2020 antitrust lawsuit brought against Google during the term of Donald Trump, a Republican.

The 2020 lawsuit alleged violations of antitrust law in how the company acquires or maintains its dominance with its monopoly in online search and is scheduled to go to trial in September.

Eight states joined the department in Tuesday’s lawsuit, including Google’s home state of California.

Google shares were down 1.6 percent on Tuesday.

The lawsuit says “Google has thwarted meaningful competition and deterred innovation in the digital advertising industry.”

In addition to its well-known search, which is free, Google makes revenue through its interlocking ad tech businesses, which connect advertisers with newspapers, websites and other firms looking to host them.

Advertisers and website publishers have complained that Google has not been transparent about where ad dollars go, specifically how much goes to publishers and how much to Google.

The company made a series of purchases, including DoubleClick in 2008 and AdMob in 2009, to help make it a dominant player in online advertising.

‘PROJECT POIROT’

While Google remains the market leader by a long shot, its share of the U.S. digital ad revenue has been eroding, falling to 28.8% last year from 36.7% in 2016, according to Insider Intelligence.

The Justice Department asked for a jury to decide the case, which was filed in the U.S. District Court for the Eastern District of Virginia.

The lawsuit lays out a number of Google’s attempts to dominate the advertising market, with the government arguing that the company has the “tech tools to quash the threat.” The complaint discussed header bidding, which was a way that companies could bypass Google to bid on ad space on websites.

It lays out a series of projects including one dubbed “Project Poirot” named after Agatha Christie’s master detective, Hercule Poirot. The project “was designed to identify and respond effectively to ad exchanges that had adopted header bidding technology.”

The 149-page complaint said Google doubled down after Project Poirot’s initial success in manipulating its advertisers’ spending to reduce competition from rival ad exchanges. Rivals AppNexus/Xandr lost 31% of DV360 advertiser spending, Rubicon would lose 22%, OpenX would lose 42%, and Pubmatic would lose 26%, the complaint said.

Copyright 2023 Thomson/Reuters

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