US sues Google over dominance of online ad market

The US Justice Department sued Google on January 24, 2023 for its dominance of the online advertising market -- the second federal case against the California-based tech giant in three years

The US Justice Department sued Google on January 24, 2023 for its dominance of the online advertising market -- the second federal case against the California-based tech giant in three years

AFP/File | Fabrice COFFRINI

WASHINGTON - The US Justice Department sued Google on Tuesday for its dominance of the online advertising market, launching a fresh legal battle against the California-based tech giant.

The case was the second federal lawsuit against Google over alleged antitrust violations and the first since US President Joe Biden took office two years ago.

The earlier case targeted Google's world-dominating search engine and is expected to go to trial later this year.

In this latest suit, prosecutors took aim at Google's extremely profitable advertising business, asking that it be broken up to level the playing field for other companies.

Google's ad dealings generated more than $200 billion in sales in 2021 and is parent company Alphabet's biggest moneymaker by a wide margin.

The US said the revenue was unlawfully maintained by a monopoly that had "corrupted legitimate competition in the ad tech industry."

"Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies," the suit added. 

The case was launched by the Department of Justice (DOJ) in conjunction with eight US states: California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia.

 

- 'Be worried' -

 

Central to the case is Google's dominance of the ad tech business, the technology that companies rely on for their online advertising needs.

The prosecutors said Google "now controls" both the buy and the sell side of the crucial sector, meaning website creators earn less and advertisers pay more, all while innovation is choked by the lack of rivals.

"In pursuit of outsized profits, Google has caused great harm to online publishers and advertisers and American consumers," said Deputy US Attorney General Lisa Monaco in a statement.

The federal case follows state lawsuits against Google that have alleged it illegally dominates the markets for online search, advertising technology and apps on the Android mobile platform.

"Google should be worried," Insider Intelligence analyst Evelyn Mitchell said.

"Advertising accounts for the vast majority of its revenues, and its ads business is as powerful as it is because of its scale and the way its ad products are integrated," she added.

Google has denied it is a monopoly, saying rivals in the online ad market include Amazon, Facebook-owner Meta and Microsoft.

"Today's lawsuit from the DOJ attempts to pick winners and losers in the highly competitive advertising technology sector," a Google spokesperson said in an email.

The lawsuit "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," Google added.

The Computer & Communications Industry Association, a big tech lobby, said the lawsuit also failed to take into account offline rivals that include ads in newspapers and on television and radio.

"The government's contention that digital ads aren't in competition with print, broadcast, and outdoor advertising defies reason," CCIA said in a statement.

Google is also facing a major probe into its ad business in Europe, where the European Commission could press charges against the giant later this year.

The United States is home to global tech giants Google, Apple, Amazon and Meta and has largely depended on the courts to curb their power.

Earlier this month Biden urged Republican and Democratic lawmakers to break years of political gridlock and pass laws that would set stricter rules for Big Tech.

 

Source
AFP

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