Antitrust Law

Google has monopoly in digital advertising technology, DOJ antitrust suit claims; are consumers harmed?

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The U.S. Department of Justice has joined with eight states in a civil antitrust lawsuit alleging that Google is monopolizing the digital advertising industry, bringing harm to website publishers, advertisers and ultimately consumers who get less content for free.

The suit, filed Tuesday in the U.S. District Court for the District of Virginia, says Google controls the technology used by nearly every major website publisher to offer display advertising space for sale, the leading tools used by advertisers to buy that space, and the largest ad exchange that matches publishers with advertisers each time ad space is sold.

The DOJ and the New York attorney general have press releases here and here.

The suit says Google has restrained competition by acquiring competitors, requiring websites to use its advertising tools, limiting bidding for advertising space to its ad exchange, and manipulating mechanisms for auctions that identify the best match between a publisher with advertising space and the advertisers who want to buy it.

“By monopolizing the components of ad tech, Google has raised advertising costs for businesses while simultaneously lowering the revenues website publishers receive for their ad space, keeping unfairly high fees for itself,” according to the New York attorney general press release. “This conduct hurts consumers because as publishers make less money on advertising inventory, fewer publishers are able to offer internet users content for free, without subscriptions, paywall or alternative forms of monetization.”

The suit could lead to the eventual breakup of Google’s advertising business, Politico reports. According to the New York Times, the suit is the DOJ’s first antitrust suit against a “tech giant” in the Biden administration.

The DOJ previously filed an antitrust suit against Google in October 2020 alleging that Google has a monopoly in search services and search advertising. That case is scheduled for trial in September 2023.

The states joining with the DOJ in the new suit are California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia. A different group of states led by Texas filed a similar suit against Google in 2020.

The new suit asks the court to rule that Google acted unlawfully and to order the divestiture of its technology in its Google Ad Manager suite.

According to the New York Times, courts have “for decades subscribed to a view that antitrust violations should mostly be determined by whether they increase prices for consumers.” But the Biden administration’s antitrust chief in the DOJ, Jonathan Kanter, along with the chair of the Federal Trade Commission, Lina Khan, have said they hope to “stretch the boundaries of the law.”

The Washington Post described both officials as “tech critics.”

A Google spokesperson told Politico that the new DOJ suit “largely duplicates an unfounded lawsuit by the Texas attorney general, much of which was recently dismissed by a federal court. DOJ is 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.”

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