US Justice Dept sues Google over digital advertising monopoly

The US Justice Department has filed an antitrust lawsuit against Google, seeking to shatter its alleged monopoly on the entire ecosystem of online advertising.

They describe it as a hurtful burden to advertisers, consumers and the US government.

It alleged Google’s plan to assert dominance in online ads had been to “neutralise or eliminate” rivals through acquisitions and to force advertisers to use its products by making it difficult to use competitors’ offerings.

The suit was part of a new push by the US to rein in big tech companies that have enjoyed largely unbridled growth.

“For 15 years, Google has pursued a course of anti-competitive conduct that has halted the rise of rival technologies and manipulated the mechanics of online ad auctions to force advertisers and publishers to use its tools,” Attorney General Merrick Garland said in a press conference.

In so doing, he added, Google has engaged in exclusionary conduct that has severely weakened, if not destroyed, competition in the ad tech industry.

“First, Google controls the technology used by nearly every major website publisher to offer advertising space for sale. Second, Google controls the leading tool used by advertisers to buy that advertising space. And third, Google controls the largest ad exchange that matches publishers and advertisers together each time that ad space is sold,” Garland said.

As a result, he said, website creators earned less and advertisers payed more.

He said this mean fewer publishers could offer their content without subscriptions, paywalls and other fees to make up for revenue.

The Justice Department’s suit accused Google of unlawfully monopolising the way ads are served online by excluding competitors.

This included its 2008 acquisition of DoubleClick, a dominant ad server, and subsequent rollout of technology that locked in the split-second bidding process for ads that got served on web pages.

Google’s ad manager lets large publishers who have significant direct sales manage their advertisements. The ad exchange, meanwhile, is a real-time marketplace to buy and sell online display ads.

The lawsuit demanded Google break off three different businesses from its core business of search, YouTube and other products such as Gmail, the buying and selling of ads, and ownership of the exchange where that business is transacted.

The antitrust suit was filed in federal court in Alexandria, Virginia.

Digital ads currently account for about 80% of Google’s revenue, and support its other, less lucrative endeavours.

But the company, along with Facebook’s parent company Meta, has seen its market share decline in recent years as smaller rivals grab bigger portions of the online advertising market. On top of that, the overall online ads environment market was cooling off as advertisers clamped down on spending and braced for a potential recession.

Alphabet Inc., Google’s parent company, said in a statement that the suit “doubles 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.”

Wednesday’s lawsuit comes as the US government was increasingly looking to rein in Big Tech’s dominance, although such legal action could take years to complete.

Google held nearly 29% of the US digital advertising market — which includes 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 was second, commanding nearly 20% of the market.

Amazon is a distant, but growing, third at more than 11%.

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

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