The Justice Department and a coalition of eight states have accused Google of spending years acquiring tools used to buy, sell and display ads on the Internet, thereby taking over the technology behind website ads and harming publishers and advertisers.
The trial, to be held in Alexandria, Virginia, is the first case brought by the Biden administration against Big Tech that will have its day in court. The Justice Department’s previous lawsuit accusing Google of illegally monopolizing internet search, the biggest antitrust case in the tech sector since a verdict against Microsoft Corp more than two decades ago, was filed in October 2020, under former President Donald Trump.
Google has denied the Justice Department’s claims, saying its tools work seamlessly with products made by competitors and that the government’s case is based on an outdated understanding of digital ad markets.
This is how Google’s digital advertising system works
Google ranks top globally Digital advertising marketplaceThat’s set to rise to $676.9 billion, according to research firm eMarketer’s 2024 projections. About $31.3 billion of Alphabet’s roughly $260 billion in revenue in 2023 came from display advertising in that case, according to the company’s most recent annual earnings report.
Justice Department antitrust lawyers say Google, by using its position as a middleman that controls the market from end to end, drives up the price of ads while underpaying the websites that show them. Because of its dominance in technology, Google has the ability to force publishers and advertisers to use its suite of products, generating monopoly profits: According to the DOJ lawsuit filed last year, Google keeps about $36 of every $100 spent through its tools.
“Website creators earn less, and advertisers pay more, while unchecked competitive pressure in the marketplace could drive prices down and lead to more innovative ad technology tools, ultimately resulting in higher quality and lower cost transactions for market participants,” the Justice Department said in the suit.
According to the Justice Department, websites display more than 13 billion ads daily, generating about $12 billion in revenue annually.
Google argues that as the internet has evolved, so has the advertising technology that supports it. Google says it now faces competition from major players in social media, apps and streaming TV services including Meta Platform Inc., ByteDance Ltd.’s TikTok, Amazon.com Inc. and Netflix Inc.
The technology giant also argues that end-to-end integration across its web advertising tools makes the technology more efficient, secure and reliable. Google says marketers and publishers choose its products because they are better, not because they don’t have other options.
In presenting its case, the DOJ plans to show how Google amassed its power in digital advertising more than a decade ago by buying up early ad networks like DoubleClick. That 2008 deal was “the first step in Google’s slide toward a monopoly,” the agency alleges in its complaint.
Before buying DoubleClick, Google used its growing advertising business to place ads next to results on its search engine. But, according to the DOJ’s lawsuit, it struggled to launch technology known as an ad server, which would allow it to place ads on other websites. The company also hadn’t yet built relationships with top advertisers.
The DoubleClick deal helped in both areas. The startup created the leading ad server, and built many connections with top publishers and blue-chip advertisers. The Justice Department claims Google now controls 91% of the market for publishers to place ads on, and can arbitrarily raise ad prices. To argue its case, the agency plans to call to testify Neal Mohan, now CEO of Google-owned video site YouTube and previously a vice president at DoubleClick.
Google pointed out that the federal government had approved the DoubleClick deal, as well as other acquisitions, such as its 2011 purchase of ad optimization platform AdMeld, when they occurred.
The Justice Department argues that Google’s actions have harmed publishers, forcing some to shift away from advertising to subscription business models while others shut down. Testimony from current and former executives from News Corp, The Daily Mail and Gannett Co. could be included in the lawsuit.
Google said it plans to call small publishers and businesses as witnesses. The company said in a statement after the Justice Department sued it that breaking up its ad technology business would “slow innovation, increase ad fees and make it harder for thousands of small businesses and publishers to grow.”
Federal prosecutors may also seek testimony from top Google leaders who played key roles in its advertising businesses. Its witness list includes Google AI executive Sisi Hsiao, formerly a director of the company’s display, video and app advertising businesses, and Jerry Dischler, now a Google Cloud executive who once oversaw Google’s advertising products and has also been called to testify in the DOJ’s search. Antitrust trial,
