The US Justice Department wants to break up Google’s advertising business on the grounds that the giant media platform runs all sides of that business.
The thrust of the action alleges that Google essentially operates as a monopoly, including the buying, selling and ad exchange.
And the result, the regulators argue, is that creators (such as traditional media) earn less and advertisers pay more than they should.
The case, comparable to the antitrust case started in the 1970s which led to the breakup of telecommunications group AT&T, will take years.
Google is being accused of using market power to “neutralise or eliminate” competitors.
The platform is certainly a giant in the advertising market but is it a monopoly and has it abused its power?
The platform points to competitors including Meta, TikTok and the rising stakes of Amazon advertising, as proof of a vigorous market.
Microsoft last year acquired advertising platform Xandr with its full ad tech stack that serves advertisers and publishers. The acquisition led Microsoft to sign a deal to build Netflix’s advertising business.
And media companies such as Comcast and Disney, and retailers including Walmart and Target, are investing in their own online advertising technology services.
Google says: “DOJ’s lawsuit ignores the enormous competition in the online advertising industry.
“Today’s lawsuit from the Department of Justice attempts to pick winners and losers in the highly competitive advertising technology sector.
“DOJ is demanding that we unwind two acquisitions that were reviewed by US regulators 12 years ago (AdMeld) and 15 years ago (DoubleClick).
“In seeking to reverse these two acquisitions, DOJ is attempting to rewrite history at the expense of publishers, advertisers and internet users. Both of these acquisitions enabled us to invest heavily in developing new and innovative advertising technologies.”
However, the US justice department says Google has been acquiring other companies to grow its power, deny publishers revenue and push prices higher.
The complaint alleges that Google monopolises key digital advertising technologies, collectively referred to as the ad tech stack, that website publishers depend on to sell ads and that advertisers rely on to buy ads and reach potential customers.
Website publishers use ad tech tools to generate advertising revenue that supports the creation and maintenance of a vibrant open web, providing the public with unprecedented access to ideas, artistic expression, information, goods, and services.
US Justice Department alleged that over the past 15 years Google has engaged in a course of anticompetitive and exclusionary conduct that consisted of neutralising or eliminating ad tech competitors through acquisitions; wielding its dominance across digital advertising markets to force more publishers and advertisers to use its products; and thwarting the ability to use competing products.
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.
“Today’s complaint alleges that Google has used anticompetitive, exclusionary, and unlawful conduct to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” said attorney general Merrick B. Garland.
“No matter the industry and no matter the company, the Justice Department will vigorously enforce our antitrust laws to protect consumers, safeguard competition, and ensure economic fairness and opportunity for all.”
Google in October reported lower than expected September quarter revenue results as a slow down in digital advertising platforms took hold.
Third quarter revenue was up 6% to $US69.1 billion, reflecting growth in Search and momentum in Cloud, but lower than expectations by market analysts.
YouTube revenue fell for the first time, down 0.2% to $US7.07 billion.
Google network advertising came in at $US54.48 billion, only slightly ahead of the $53.13 billion for the same quarter last year.
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