WASHINGTON, Jan 24 (Reuters) – The U.S. Department of Justice has sued Alphabet’s ( GOOGL.O ) Google for abusing its dominance in its digital advertising business, saying the ad manager should be forced to sell the suit. The government’s latest adventure in thwarting Big Tech’s market power.
The lawsuit concerns Google’s business, which accounts for 80% of its revenue. The Justice Department asked the court to order Google to dismantle a key part of its ad technology business.
“Google has used anti-competitive, exclusionary and illegal means to eliminate or substantially eliminate its dominance in digital advertising technologies,” the antitrust complaint said.
Google says the government is doubling down on a flawed argument that slows innovation, raises advertising costs and makes it harder for thousands of small businesses and publishers to thrive.
The federal government has said it is trying to level the playing field for big tech companies including Amazon.com ( AMZN.O ), Facebook owner Meta Platforms ( META.O ) and Apple Inc ( AAPL.O ).
Tuesday’s lawsuit by Democratic President Joe Biden’s administration is a 2020 antitrust lawsuit filed against Google under Republican Donald Trump.
In the year
Eight states in the case
Eight states, including Google’s state of California, joined Tuesday’s lawsuit.
California State Attorney General Rob Bonta said Google’s practices “killed innovation where innovation is critical.”
Colorado Attorney General Phil Weiser said Google’s dominance has led to higher payments for advertisers and less money for publishers who have ad space. “By filing this lawsuit, we are working to remove Google’s monopoly and restore competition to the digital advertising industry,” he said in a statement.
Google fell 1.9 percent on Tuesday.
In addition to its popular search, if free, Google makes money through its affiliate ad technology businesses. The government has demanded that the Google Ad Manager suite, including the Google Ad Exchange, be copied.
Google Ads Manager is a set of tools, including an exchange, that allows websites to offer ad space for sale and a marketplace that matches advertisers directly.
Advertisers and web publishers have complained that Google is unclear about where ad dollars go, particularly how much goes to publishers and how much is spent on Google.
Tuesday’s lawsuit raises concerns about some of the products in the ad technology stack, where publishers and advertisers buy and sell ad space. That business was about $31.7 billion in 2021, or 12.3 percent of Google’s revenue. 70% of the revenue goes to the publishers.
It made a series of acquisitions, including DoubleClick in 2008 and AdMob in 2009, to help it become a dominant player in online advertising.
‘Project Pole’
While Google remains the market leader by far, its share of US digital advertising revenue is eroding, according to Insider Intelligence.
The Justice Department asked a jury to review the lawsuit filed in the U.S. District Court for the Eastern District of Virginia.
The lawsuit lays out several attempts by Google to dominate the ad market, and the government argues that the company has the technological tools to fend off competitors’ threats.
The complaint discussed title auctions, a way for companies to bid for ad space on websites by bypassing Google.
He developed a series of projects, including one named “Project Porot”, named after Agatha Christie’s chief investigator, Hercule Porot. The project is “designed to identify and effectively respond to ad exchanges that have adopted header bidding technology.”
In the 149-page complaint, Google doubled down on Project Poirot’s initial success in controlling advertisers’ spending and reducing competition from rival ad exchanges. Competitors AppNexus/Xandr lose 31% of DV360’s advertiser spend, Rubicon 22%, OpenX 42% and Pubmatic 26%, the complaint said.
Reporting by Diane Bartz and David Shepardson; Additional reporting by Sheila Dang; Editing by Chris Sanders and Grant McCool
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