The Justice Department and eight states sued Google on Tuesday, accusing the company of harming competition with its dominance in the online advertising market and calling for its dissolution.
The decision marks the Biden administration’s first successful antitrust case against a Big Tech company. The eight states joining the lawsuit are California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia.
The new complaint dramatically escalates the risks for Google emanating from Washington, where lawmakers and regulators have frequently raised concerns about the tech giant’s power but have so far failed to pass new laws or regulations. likely to hold back the company or its peers.
For years, critics of Google have claimed that the company’s important role in the digital ecosystem, which allows advertisers to place ads and publishers to offer digital advertising space, represents a conflict of interest that Google operated in an anti-competitive manner.
In Tuesday’s complaint, a copy of which was seen by CNN, the Justice Department alleged that Google was actively and unlawfully maintaining that dominance by engaging in a campaign to thwart competition. Google has gobbled up rivals through anticompetitive mergers, the US government said, and bullied publishers and advertisers into using the company’s proprietary ad-tech products.
For 15 years, Google’s alleged anti-competitive behavior has resulted in lower advertising revenue for websites and publishers, and higher advertising costs for marketers, Attorney General Merrick Garland said Tuesday at a hearing. a press conference. Even the US government was harmed, according to the complaint, which named the US military as one of multiple government advertisers using Google’s tools. Since 2019, the U.S. government has spent $100 million buying online ads, according to the complaint.
As part of the lawsuit, the US government asked that Google be broken up and that the court order the company to divest at least its online advertising exchange and ad server to publishers, if not more.
Google, according to the US government, “has corrupted legitimate competition in the ad-tech industry by engaging in a systematic campaign to take control of the vast array of high-tech tools used by publishers, advertisers and brokers, to facilitate digital advertising. Having inserted itself into all aspects of the digital advertising market, Google has used anti-competitive, proprietary, and illegal means to eliminate or significantly reduce any threat to its dominance in advertising technologies. digital advertising.
The lawsuit was filed in the U.S. District Court for the Eastern District of Virginia.
Tuesday’s suit marks the federal government’s second antitrust complaint against Google since 2020, when the Trump administration sued for alleged anticompetitive harms by Google in search and search advertising. This case is still ongoing. Google has also been the target of antitrust litigation by public and private actors.
In a statement, Google said the DOJ lawsuit “attempts to pick winners and losers in the highly competitive ad tech industry.”
“The DOJ is doubling down on a flawed argument that would slow innovation, increase advertising costs and make it harder for thousands of small businesses and publishers to grow,” a Google spokesperson said, adding that a judge The federal government had rejected a claim last year that Google partnered with Facebook in a separate antitrust lawsuit brought by the state of Texas. That judge also ruled, however, that a number of monopolization claims in the Texas case could go forward.
Asked to respond to Google’s statement, Garland said Tuesday, “We don’t pick winners or losers. We pick those who violate antitrust laws. Those are the people we prosecute.
The lawsuit is a frontal assault on Google’s massive and core advertising business. Google generated $209 billion in advertising revenue in 2021, according to its annual report, a figure representing more than 80% of its total revenue. By comparison, the second-largest online advertising giant, Facebook parent Meta, generated $115 billion in 2021. (Tuesday’s lawsuit targets a subset of Google’s ad revenue represented by display advertising, a business worth about $32 billion for the company.)
Third-party estimates suggest that Google and Facebook accounted for the majority of digital advertising revenue in the United States, peaking around 2017, with Google taking around a third of the market. Since then, however, others, including Amazon, have begun to encroach on this business.
The US complaint echoes concerns that have prompted similar antitrust investigations in the UK and European Union.
Google not only controls the platform publishers use to sell ad inventory online, the Justice Department said Tuesday, but also the advertising tools marketers use to claim that inventory and the exchange that facilitate these transactions.
“Google’s pervasive power over the entire ad-tech industry has been questioned by its own digital advertising executives,” the complaint states, “at least one of whom aptly posed the question:”[I]Is there a deeper issue with the fact that we own the platform, the exchange, and a huge network? The analogy would be if Goldman or Citibank owned the NYSE.
Tuesday’s complaint marks an opening salvo against Big Tech by DOJ antitrust chief Jonathan Kanter. Kanter has spent months laying the groundwork for a broader offensive against the tech industry’s most dominant companies, mirroring commitments by President Joe Biden and other members of the US government to hold powerful companies accountable. Under Kanter, Justice Department antitrust officials pushed to bring more cases to court as well as to pursue cases involving unconventional legal theories.
On Tuesday, Kanter told reporters that Google was abusing “long-standing monopolies in digital advertising technology” to give itself an advantage.
“Google’s own documents estimate that it keeps at least 30 cents of every advertising dollar that passes through Google’s advertising tools,” Kanter said, adding that in some situations the figure can be much higher.
In 2020, House lawmakers released a 450-page report concluding that Google, along with Amazon, Apple and Facebook, wield “monopoly power” in key business segments. The report is the result of a 16-month investigation in which congressional staff reviewed corporate documents and interviewed the tech industry’s many customers and rivals. He concluded, among other things, that Google was in a unique position to benefit from its powerful role in the online advertising industry.
“With a significant share of the ad exchange market and ad intermediaries market, and as the primary provider of ad space, Google acts simultaneously on behalf of publishers and advertisers, while also negotiating for itself,” indicates the report.