DOJ sues Google over digital ad market dominance

The US Justice Department and eight states sued Alphabet's Google, calling for the break up of the search giant’s ad-technology business over alleged illegal monopolization of the digital advertising market. “The harm is clear: website creators earn less, and advertisers pay more, than they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative ad tech tools that would ultimately result in higher quality and lower cost transactions for market participants,” the Justice Department said in the complaint, which was filed in federal court in Virginia. “This conduct hurts all of us.” New York, California and Virginia were among the states that signed on to the complaint. Google said in an emailed statement that the lawsuit “attempts to pick winners and losers in the highly competitive advertising technology sector.” The case, Google said, “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.” Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here Alphabet extended declines on the news, dropping as much as 1.9% to touch a session low. The stock slid 23% in the 12 months ended Monday, underperforming the Nasdaq 100 Index. The lawsuit represents the Biden administration’s first major case challenging the power of one of the nation’s largest tech companies, following through on a probe that began under former President Donald Trump. It also marks one of the few times the Justice Department has called for the breakup of a major company since it dismantled the Bell telecom system in the 1980s. Google is the dominant player in the $278.6 billion US digital-ad market, controlling most of the technology used to buy, sell and serve online advertising. The Justice Department said Google’s dominance allows it to keep at least $0.30 out of every dollar advertisers spend through its online advertising tools. A resolution in the case could be years away. The lawsuit marks the DOJ’s second antitrust suit against Google and the fifth major case in the US challenging the company’s business practices. State attorneys general have filed three separate suits against Google, alleging it dominates the markets for online search, advertising technology and apps on the Android mobile platform in violation of antitrust laws. The allegations in the DOJ’s suit mirror those brought by attorneys general in 16 states plus Puerto Rico in 2020. That lawsuit is pending in New York federal court. The Mountain View, California-based company is No. 1 in the $626.9 billion global digital ad market, according to 2023 estimates by research firm EMarketer, with the US representing the biggest piece. Alphabet’s ad operations are expected to bring in $73.8 billion in US digital ad revenue in 2023. Most of that, $58.50 billion, comes from Google’s search advertising business. The remaining $15.29 billion is from display ads. Google runs an ad-buying service for marketers and an ad-selling one for publishers, as well as a trading exchange where both sides complete transactions in lightning-fast auctions. —Bloomberg News Subscribe to Ad Age Sign up now for the latest industry news and analysis Click here

DOJ sues Google over digital ad market dominance

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