DOJ sues Google over online advertising dominance

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The Justice Department brought a second federal antitrust lawsuit against search giant Google on Tuesday, alleging that the company abused its dominance to shut out competitors in digital advertising.

The suit seeks to break up Google’s core business, forcing it to sell off much of its advertising technology products. These products help ad agencies place bids for ad placements on both Google products like Search and YouTube, and on millions of other websites. The tools also allow publishers, such as newspapers or other online content companies, make money, by posting their ad space on Google products.

The DOJ’s action poses a significant financial threat to the company, which has been slashing jobs amid a pullback in advertising. Google’s “network” advertising business, which includes the money it makes from its myriad products that let other companies place their ads on non-Google websites all over the web, brought in $7.9 billion for the company in the third quarter of 2022, about the same as all of Google’s revenue from YouTube.

Read the DOJ’s new antitrust lawsuit against Google

The lawsuit is a high-stakes test of the Biden administration’s commitment to dismantling concentration in Silicon Valley. It’s the first lawsuit that the agency has brought against a tech giant under the leadership of antitrust division chief Jonathan Kanter, a prominent adversary of Big Tech companies including Apple and Google.

Eight state attorneys general, who are playing an increasingly prominent role in tech regulation, also joined the DOJ’s lawsuit.

The suit alleges that Google engaged in a “systematic campaign” to gain a grip on the high-tech tools that publishers, advertisers and brokers use to buy and sell digital advertising.

“Having inserted itself into all aspects of the digital advertising marketplace, Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” the lawsuit says.

Google has used its control over the ad market to harm its rivals, resulting in a “broken” advertising market where website creators earn less and advertisers pay more, the DOJ says. This also affects consumers because when publishers make less money from advertising, they have to charge people through subscriptions, paywalls and other forms of monetization, the lawsuit claims.

The suit adds to Google’s mounting legal challenges, as the company is already fending off a separate federal antitrust lawsuit that was filed in fall 2020 during the Donald Trump administration. That suit is scheduled to go to trial later this year and alleges that aspects of Google’s contracts with other companies are exclusionary and serve to reinforce Google’s dominance at the expense of rivals. Google also faces multiple antitrust lawsuits led by state attorneys general.

The federal government has been investigating alleged monopoly behavior by Google and other tech giants for several years as the industry amassed more power and influence. A sweeping 16-month investigation conducted by the House’s top antitrust panel concluded in 2020 that Amazon, Apple, Facebook and Google engaged in anti-competitive, monopoly-style tactics to become leading tech giants. (Amazon founder Jeff Bezos owns The Washington Post.)

Google antitrust case centers on consumer choice and how rivals get boxed out

Google called the first lawsuit “deeply flawed” when it was filed, and said it wouldn’t help consumers. The company did not immediately return a request for comment on Tuesday’s suit.

President Biden has signaled his intention to take on Big Tech’s power, in part by appointing tech monopoly critics Lina Khan as head of the FTC as well as Kanter. But the push for greater antitrust enforcement in the United States has floundered in recent years. The last Congress did not pass significant legislation addressing Big Tech’s growing power, despite a years-long, bipartisan push to overhaul existing U.S. antitrust law.

The U.S. government has brought more antitrust lawsuits in recent years, but they face an uphill battle in a court system that has taken an increasingly narrow view of competition law. The lawsuits are also often lengthy affairs that take years to reach trial and outcomes.

Herb Hovenkamp, an antitrust professor at the University of Pennsylvania Law School, said its possible that Google would eventually have to divest some of its business, but noted that it hasn’t always been easy for the government to get divestitures ordered through the courts.

“There’s a lot of headwinds here including a fairly conservative judiciary, so we’ll just have to see what happens,” he said.

Gerrit De Vynck contributed to this report from San Francisco.



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