The Department of Justice and eight states have accused Google of using its market dominance to the detriment of its competitors, allowing ad buyers and sellers to use their products on terms that are less favorable than those offered by other companies. It is suing Google over its digital advertising business for forcing it to do so. Google, on the other hand, has a good chunk of the top spot — at least 30%, the complaint says.
At a press conference announcing the lawsuit, Attorney General Merrick Garland said, “Website creators earn less and advertisers pay more.”
That means, according to the DOJ, websites that rely on digital advertising earn less from advertising and provide less money than they otherwise would. Advertisers pay more than they should, but the cost is usually passed on to the customer.
The DOJ wants Google to sell or spin off parts of its digital advertising division, removing control over all aspects of the ad tech stack (buyer-side, seller-side, and intermediate exchanges). Google will make about $169 billion in digital advertising worldwide in 2022, but the majority of that revenue (and Google’s revenue, period) comes from search advertising. The lawsuit does not target Google’s search advertising empire, but rather the part of the business that advertises on his website on the internet outside of Google’s property. This is a much smaller percentage of Google’s revenue, but still a significant percentage.
In a rare move, the DOJ is also seeking financial damages from the government, and Google’s anti-competitive inflated ad prices are worth the $100 million it has purchased since 2019 to promote various institutions and services. It says it’s pushing government costs through display advertising. Yes, the federal government says it’s also a victim of Google’s bad advertising behavior.
The lawsuit comes at a relatively difficult time for Google, which lost about 25% of its stock last year and laid off 12,000 people, about 6% of its workforce. The DOJ lawsuit is certainly an unwelcome addition to Google’s predicament. But cases like this take years to get through the court system, and there’s no guarantee that the DOJ will win.
A more immediate threat to Google is that additional battles with the government will be another distraction for the company, which is opposing new regulations and battling burgeoning competitive threats in other areas. YouTube had to introduce “Shorts” to catch up with TikTok. Microsoft is pouring billions into OpenAI, a company that rivals Google’s own AI efforts, threatening to power Microsoft’s search engine Bing with a ChatGPT chatbot. Meanwhile, advertising spending across the board, including Google and its affiliates, is declining. Google’s advertising business hasn’t been hit as hard as other businesses, but overall revenue isn’t growing as much as it used to.
The DOJ has reportedly been preparing a lawsuit against Google’s digital advertising business for years, even before the Biden administration. This latest lawsuit also joins her four other government antitrust lawsuits already facing Google. Among them are his DOJ lawsuit in October 2020 regarding the search engine and search advertising business, one of which he filed in December of the same year by the Attorney General of 38 States. increase. In July 2021, 37 state attorneys general sued Google over the Play app store, and 17 state attorneys general filed lawsuits similar to the DOJ’s current lawsuit over its digital advertising business.
“Today’s lawsuit by the DOJ seeks to pick winners and losers in the highly competitive ad tech space,” Google said in a statement. Dan Taylor, vice president of global advertising, said the lawsuit would harm, not help, the advertising industry and innovation, and that the government was forced to sell the company a 15-year-old acquisition that was once approved by regulators. He said he could not force them to rewind.
Google also noted that it is in a crowded and competitive place.Google, Meta and increasingly Amazon hold the largest share of the US digital advertising market, with Google having the largest occupies Another antitrust law enforcement agency, the Federal Trade Commission, is also suing Meta and Microsoft over an acquisition it claims is anticompetitive.
The Chamber of Progress, a Google-backed big tech advocacy group, said in a statement that the case was “decoupled from economic reality” and that Google’s digital advertising market share (about 29% estimated to be the largest share). of any company) was the “lowest ever”.
Antitrust advocates, who have denounced Big Tech for years, applauded the move. “Google is rightly held accountable for years of abuse in the online marketplace,” Kyle Morse, deputy executive director of the Tech Oversight Project, said in a statement. He added that Google’s rivals should learn a lesson and rethink their actions. “Otherwise, you’re next,” said Morse.
DOJ’s other antitrust lawsuit against Google, filed in October 2020, is scheduled for trial in September 2023. Google’s government troubles are likely to continue for the next decade, at which point an entirely new company could emerge to rule the Internet.