A month after losing a historic antitrust lawsuit brought by the Department of Justice, Google is going to go back to court to take on federal prosecutors once more.
The largest antitrust verdict in the computer sector since the Microsoft case more than 20 years ago was rendered in August when a judge determined that Google had monopolized internet search. This time, Google is defending itself against accusations that it has operated like a monopoly in the advertising industry, driving up ad rates for consumers.
The trial will probably go on for at least a few weeks once it starts in Alexandria, Virginia, on Monday. In a lawsuit launched by the Biden administration, it is the first tech antitrust trial. When Donald Trump was president, in October 2020, the agency filed its initial complaint.
Although American authorities have been pursuing Big Tech for the past few years, only Google has made it to federal court. Apple was sued by the DOJ in March, claiming that the exclusive nature of the iPhone ecosystem led to the company’s “astronomical valuation” at the cost of customers, developers, and other phone manufacturers.
The Federal Trade Commission launched an antitrust lawsuit against Facebook (now Meta) in late 2020, alleging the firm had acquired Instagram and WhatsApp to create a monopoly. Meta urged the court to dismiss the lawsuit earlier this year. The FTC and 17 states filed a lawsuit against Amazon in 2023, alleging that the company had used its “monopoly power” to raise prices, lower customer quality, and forcibly bar competitors, so stifling competition.
Regarding Google, the emphasis shifts to its advertising tools, which are a component of the $200 billion digital ad industry.
Google is accused by the government of breaking the Sherman Act’s Sections 1 and 2, which forbid anticompetitive activities. The Department of Justice will contend that Google forced publishers and advertisers to use its products exclusively, forcing websites to create workarounds. Tennessee, California, Colorado, Connecticut, New Jersey, New York, Rhode Island, and Washington joined the group in the lawsuit.
Over the years, Google’s ad business has faced criticism from many quarters due to its platform’s ability to operate on three different sides of the market: buying, selling, and an ad exchange. This gives the corporation access to unique data and potential power. The DOJ used internal correspondence from a Google ad executive, who stated that controlling both ends of the ad-selling process is comparable to “if Goldman or Citibank owned the NYSE,” in reference to the New York Stock Exchange, in its original case.
What’s at risk is Google’s ability to manage its array of advertising goods. If the DOJ is successful, it will attempt to divest at least the Google Ad Manager suite (GAM), which is a marketplace where publishers can sell ad inventory and brands can design and manage ad units as well as track campaigns.
That is not the same as Google Ads, the company’s flagship platform, which is mostly used by companies to promote their goods and services on websites, YouTube, and other partner platforms in addition to search results.
Over three-quarters of total revenues were accounted for by $64.6 billion in ad income recorded by Alphabet, the parent company of Google, in the most recent quarter. Of that total, $8.7 billion came from YouTube, while $48.5 billion came from search and other companies like Gmail and Maps.
The GAM suite is a component of Google Network, which brought in $7.4 billion in revenue during the second quarter of this year, or almost 11% of all ad sales.
If the DOJ is successful, Google may face a plethora of lawsuits from advertisers seeking financial compensation in addition to a possible partial split. Analysts at Bernstein stated that Google may be subject to litigation worth up to $100 billion.
The court determined that Google had broken Section 2 of the Sherman Act, which forbids monopolies, in the first antitrust case. The DOJ contended that Google has maintained its dominance in the general search market by erecting significant hurdles to entry and a feedback loop, and Judge Amit Mehta of the U.S. District Court for the District of Columbia concurred.
Mehta stated, “Google is a monopolist, and it has behaved as one to maintain its monopoly.”
Google is currently awaiting its penalty in that instance. The Department of Justice is requesting an extension until February in order to provide remedies, with a hearing scheduled for April. According to Google, the DOJ ought to have completed its due diligence and be ready to submit its recommendation in October.
What each party will dispute
In the second case, the Department of Justice intends to demonstrate how Google has amassed unparalleled power by acquiring businesses such as DoubleClick in 2008 and by developing services that enable advertisers to target consumers throughout the internet.
According to the Justice Department, the company’s M&A strategy “set the stage for Google’s later exclusionary conduct across the ad tech industry.” According to the agency, Google unjustly raises ad rates since it owns 91% of the market for ad servers, which are spaces where publishers sell advertisements.
Neal Mohan, the CEO of YouTube, will give a live testimony at the DOJ. Prior to the purchase, Mohan served as vice president at DoubleClick. The agency claims that DoubleClick’s technology, which was integrated into Google’s ad tech stack, enabled Google to, in some cases, force publishers to utilize all of its products in order to obtain access to any of them. This prevented publishers from using competing services for any portion of the online ad-buying process.
“In a market where unrestricted competition could discipline prices and lead to more innovative ad tech tools that would ultimately result in higher quality and lower cost transactions for market participants,” the DOJ claims. “Website creators earn less, and advertisers pay more, than they would.”
According to the government, some publishers have been compelled to switch to alternate business models like subscriptions in order to finance their operations, while others have gone out of business.
Google has consistently refuted assertions that it controls the majority of internet advertisements by highlighting the market shares of rivals like Meta. It will contend that, given the evolution of the internet ad industry, buyers and sellers have a plenty of alternatives.
Additionally, Google will contend that the DOJ’s actions would hinder innovation, increase advertising costs, and impede the expansion of thousands of small companies and publishers.
The business asserts that the DOJ’s view of the ad space is inaccurate and that its ad technologies are designed to handle the billions of online ad auctions that occur every day. Additionally, Google will testify in court that it has always provided customers—who frequently mix and match advertising platforms—with competitive pricing.
In terms of closing deals, Google will argue that regulators approved of DoubleClick and AdMeld and that they weren’t game-changing purchases at the time.
Jerry Dischler, the current head of Google’s cloud applications and a former vice president of the company’s ad platform, is one of the witnesses the DOJ has identified as possibly testifying in support of its case. Additionally, there is a chance to contact many Google product managers.
Google AI executive Sissie Hsiao, a former director of worldwide display, video, and mobile app advertising, and vice president of Google partnerships Scott Sheffer are also mentioned on the DOJ’s list. According to documents, the government intends to present evidence from internal Google conversations, as well as testimonies from publishers, advertisers, and businesses who attempted to take on Google, as well as specialists and academics from Stanford and Harvard.
Google also mentioned that Nitish Korula, the engineering director of Google Assistant and a former senior technical advisor to Prabhakar Raghavan, the head of search, may be called upon. It also recommended that officials from BuzzFeed and The New York Times take depositions, and it sought evidence from Meta’s vice president Simon Whitcombe.
The executives on the list that Google and the DOJ presented may or may not be summoned to testify or provide a deposition.
