The Justice Department and Alphabet Inc.’s Google are back in a familiar setting. The longtime combatants were in federal court Monday for an antitrust trial over the company’s digital-advertising business.
As Justice officials and several dozen state attorneys general huddle on remedies for Google, following their sweeping victory in a search antitrust case in August, the DoJ and 17 states are embarking on another.
This time, the case centers on how Google monetizes advertising and whether its methods smother competition and damage news publishers. Prosecutors allege Google unlawfully leveraged its dominance in the market — estimated at anywhere from 40% to 90% in 2022 — to monopolize ad servers and networks, monopolize or attempt to monopolize ad exchanges, and unfairly tie its publisher and advertising tools.
The DoJ’s complaint seeks divestiture of the Google Ad Manager Suite.
The stakes are huge: Google’s AdTech business accounts for more than 75% of its annual revenue. [Alphabet reported $307.4 billion in 2023 sales.]
To get there, Justice officials claim, Google undertook a “systematic campaign” to gain market share through the acquisition of companies like DoubleClick (bought for $3.1 billion in 2007) and AdMeld ($400 million in 2011) whose tools are essential for publishers and advertisers.
They also claim advertisers were forced to use Google Ads or Google Marketing Platform to make transactions across Google properties such as search and YouTube.
According to Justice officials, these and other business practices laid waste to the digital publishing industry, leading to widespread closures and consolidation that greatly contributed to the decline of traditional news publishers.
Google staunchly rejects the DoJ’s claims, asserting its products are interoperable with competitors’ tools and it does not owe rivals access to its proprietary technology. It also disputes the government’s depiction of its market share, saying it is much smaller than what prosecutors suggest when accounting for ads across apps, social media and streaming services.
Legal experts expect Google will chip away at the federal government’s point that it forced customers to use its products exclusively, arguing its products are innovative and designed to protect the privacy, security and safety of customers.
The weeks-long trial is sure to generate headlines worldwide, but it remains unclear what immediate impact it will have on Google.
“While we acknowledge near-term headline risk associated with the pending trial, we believe the overall risk to the business is limited based on the company’s recent financial disclosures related to its AdTech products,” Wedbush Securities analyst Dan Ives said in a note to investors Thursday.
