The US Justice Department (DOJ) and eight states have sued Google for its monopoly over the digital advertising market, seeking to break up the tech giant’s core advertising business.
The development comes a day after reports emerged that Google would face an antitrust lawsuit for its dominant business practices. The case was first reported by Bloomberg, which, citing informed sources, stated the case would be brought in the federal court.
“Google’s anticompetitive behavior has raised barriers to entry to artificially high levels, forced key competitors to abandon the market for ad tech tools, dissuaded potential competitors from joining the market, and left Google’s few remaining competitors marginalized and unfairly disadvantaged,” states the lawsuit.
The complaint accuses Google of engaging in anti-competitive and exclusionary practices over the past 15 years to neutralise or eliminate ad tech competitors through acquisitions, by forcing publishers and advertisers to use its products, and restricting the use of competing services. “In doing so, Google cemented its dominance in tools relied on by website publishers and online advertisers, as well as the digital advertising exchange that runs ad auctions.”
Google pockets more than 30 per cent of the advertising dollars that flow through its products, says DOJ. However, for some transactions, publishers and advertisers, the percentage may be higher. Google’s anti-competitive conduct has suppressed alternative technologies and impeded their adoption by rivals, publishers and advertisers, DOJ adds.
The eight US states joining the high-profile lawsuit are California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia.
Responding to the complaint, Google says the DOJ lawsuit mischaracterises how the company’s advertising products work.
“No one is forced to use our advertising technologies – they choose to use them because they’re effective. In fact, publishers and advertisers typically work with multiple technologies simultaneously to reach customers and make more money,” reads the statement by Google. “Publishers who choose to use our advertising platforms keep the vast majority of the revenue our tools help facilitate. In total, we pay billions of dollars directly to the publishing partners in our ad network every year.”
The company adds the DOJ lawsuit “would reverse years of innovation, harming the broader advertising sector”.
This is the second antitrust lawsuit filed by DOJ against Google in less than two years.
Excerpt: Advertisers and website publishers have repeatedly complained about Google’s lack of transparency regarding the revenue generated through their content and how much of it is pocketed by the search engine. Big Tech platforms, especially Google and Facebook, have been accused of exploiting media publications by taking a large portion of the profits generated through news content.
In September 2022, Media Matters for Democracy (MMfD) launched State of Pakistan’s Media Economy: Impact on Independent Journalism, which examines the overall situation for digital advertising revenue in relation to the media industry in Pakistan. The research found that nearly 85 per cent of the digital ad revenue is collected by leading social media firms, primarily Google and Meta.
For more on how this dominance and lack of transparency impede the space for alternative mechanisms to enable direct monetisation for media organisations, read the publication here: State of Pakistan’s Media Economy: Impact on Independent Journalism.