US targets Google to stop monopoly in digital advertising

The U.S. Justice Department said Google should be forced to sell its ad manager suite, a business that generated about 12 percent of Google’s revenues in 2021.
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The government feels that Google is abusing its dominance in digital advertising business. Google now controls the digital tool that nearly every major website publisher uses to sell ads on their websites (publisher ad server); it controls the dominant advertiser tool that helps millions of large and small advertisers buy ad inventory (advertiser ad network); and it controls the largest advertising exchange (ad exchange) that runs real-time auctions to match buyers and sellers of online advertising, DoJ said in a news statement.

“Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” DoJ said in its antitrust complaint on Tuesday.

Google pockets on average more than 30 percent of the advertising dollars that flow through its digital advertising technology products; for some transactions and for certain publishers and advertisers, it takes far more. Google’s anticompetitive conduct has suppressed alternative technologies, hindering their adoption by publishers, advertisers, and rivals.

Google, whose online advertising business is responsible for about 80 percent of its revenue, said the government was “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.”

The federal government has said its Big Tech investigations and lawsuits are aimed at leveling the playing field for smaller rivals to a group of powerful companies that includes Amazon.com, Facebook owner Meta Platforms and Apple.

“By suing Google for monopolizing advertising technology, the DOJ aims at the heart of the internet giant’s power,” said Charlotte Slaiman, competition policy director at Public Knowledge. “The complaint lays out the many anticompetitive strategies from Google that have held our internet ecosystem back.”

Tuesday’s lawsuit by the administration of President Joe Biden, a Democrat, follows a 2020 antitrust lawsuit brought against Google during the term of Donald Trump, a Republican.

The 2020 lawsuit alleged violations of antitrust law in how the company acquires or maintains its dominance with its monopoly in online search and is scheduled to go to trial in September.

Eight states joined Tuesday’s lawsuit, including Google’s home state of California.

California State Attorney General Rob Bonta said that Google’s practices have “stifled creativity in a space where innovation is crucial.”

Colorado Attorney General Phil Weiser said that Google’s dominance had led to higher fees for advertisers and less money for publishers with ad space to offer. “We are taking action by filing this lawsuit to unwind Google’s monopoly and restore competition to the digital advertising business,” he said in a statement.

In addition to its well-known search, which is free, Google makes revenue through its interlocking ad tech businesses. The government asked for the divestiture of the Google Ad Manager suite, including Google’s ad exchange, AdX.

Google Ad Manager is a suite of tools including one that allows websites to offer advertising space for sale and an exchange that serves a marketplace that automatically matches advertisers with those publishers.

Advertisers and website publishers have complained that Google has not been transparent about where ad dollars go, specifically how much goes to publishers and how much to Google.

The lawsuit raises concerns about certain products in the ad tech stack, where publishers and advertisers use Google’s tools to buy and sell ad space on other websites. That business was about $31.7 billion in 2021 or 12.3 percent of Google’s total revenue. About 70 percent of that revenue goes to publishers.

Ad tech divestiture may not be a game changer but it could be sneaky important to Google’s ad targeting capability, said Paul Gallant with the Cowen Washington Research Group.

Google made a series of purchases, including DoubleClick in 2008 and AdMob in 2009, to help make it a dominant player in online advertising.