DOJ sues Google for ad dominance, wants to break up company

It’s been expected for some time, but today the Department of Justice and eight states are suing Google for its alleged dominance in the online advertising market. The government has a problem with Google’s stance on “advertising technology,” or the tools used to automatically match advertisers with website publishers. To solve it, apparently, the DOJ told Google that it was considering breaking up the company.

“Today’s complaint alleges that Google used anti-competitive, exclusionary and unlawful conduct to eliminate or materially lessen any threat to its dominance in digital advertising technologies,” Attorney General Merrick Garland said. . “No matter the industry and no matter the company, the Department of Justice will vigorously enforce our antitrust laws to protect consumers, safeguard competition, and ensure economic fairness and opportunity for all.”

The press release gives a brief overview of what is troubling the DOJ:

Google’s anti-competitive behavior includes:

• Acquire competitors: Engage in an acquisition scheme to obtain control of the main digital advertising tools used by website publishers to sell advertising space;
• Force adoption of Google tools: Lock website publishers to its newly acquired tools by limiting its single, must-have advertiser demand to its ad exchange and, in turn, condition effective real-time access to its ad exchange to use of its publisher ad server;
• Distorting Bidding Contest: Limit real-time bidding on Publisher’s inventory in its marketplace and impede the ability of competing marketplaces to compete on the same terms as Google’s marketplace; and
• Bid manipulation: Manipulate auction mechanisms on several of its products to isolate Google from the competition, deprive rivals of scale and halt the rise of competing technologies.

Google is the largest digital ad broker in the United States, but not by much. Axios reported that Google holds 28.8% of all digital ad spend in the US, followed by Meta at 19.6%. There are also many companies with great growth potential, such as Amazon, TikTok, Spotify, and Apple, but for now these companies tend to focus only on their specific platforms.

It’s not the overall market share that the DOJ worries about: it’s the market share of the individual tools used by publishers and advertising companies. On the “sell” side (on the side of websites that have ad space for sale, like this one), the DOJ says Google’s “DoubleClick for Publishers” ad server has over 90% market share . On the “buy” side (the side of advertisers who are looking for a place for their ads), the Google Ads network for small businesses has an 80% market share, while “Display & Video 360” for large advertising agencies in owns 40%. market share percentage. The Google ad exchange, which connects sellers and buyers, has a 50% market share.

Regarding the remedy, the DOJ says, “To remedy Google’s anticompetitive conduct, the Department is seeking both equitable relief on behalf of the American public as well as treble damages for losses suffered by federal government agencies. who overpaid for display advertising on the Web. This enforcement action marks the first monopolization case in approximately half a century in which the Department has sought damages for a civil violation of antitrust laws.” he wants Google to refund money.

Google published a blog post saying it disagreed with the government’s latest antitrust lawsuit. After the usual spiel about how the market is more competitive than the plaintiff thinks, he adds a new threat that isn’t mentioned in the press release, saying, “The DOJ demands that we cancel two acquisitions that were reviewed by U.S. regulators 12 years ago (AdMeld) and 15 years ago (DoubleClick).In seeking to reverse these two acquisitions, the DOJ is attempting to rewrite history at the expense of publishers, advertisers and Internet users.”

It’s hard to believe that Google would ever be broken up. We hear the threat quite often, but the last time the government dismantled a company was almost 40 years ago. At the time, the telephone company, Bell Systems, was spun off into what would become AT&T, Verizon and Lumen Technologies/CenturyLink/Qwest. The U.S. government’s willingness to regulate corporations has since diminished greatly, and today the threat is usually just a starting point for negotiation.

Ahead of that lawsuit, Google told the DOJ last year that it would be willing to “split up” the advertising business by transferring a Google unit to its parent company, Alphabet. It’s a move that seems barely registered when Google and Alphabet have the same CEO, CFO, ticker symbol, and all share the same (really big) stack of cash.