Credit: Akshat Jhingran via Unsplash
Google will report its March quarter earnings later this week just as a US court has decided the world's biggest digital advertising platform operates an illegal monopoly in advertising technology.
The US Department of Justice recorded a victory when a judge in a federal court ruled Google acted illegally to acquire and maintain monopoly power by linking its publisher ad server and ad exchange together through contractual policies and technological integration.
However, Google disagrees with the antitrust ruling, saying publishers have many options and they choose Google because its tools are simple, affordable and effective.
The Justice Department wants Google to be forced to sell parts of its adtech business, to break up the relationship between Google’s publisher ad server and ad exchange markets.
“For over a decade, Google has tied its publisher ad server and ad exchange together through contractual policies and technological integration, which enabled the company to establish and protect its monopoly power in these two markets," the judge said.
“Google further entrenched its monopoly power by imposing anti-competitive policies on its customers and eliminating desirable product features.”
Industry analysts say the end game will take years to run. Whether or not Google will be forced to a breakup, to cure its monopoly, will depend on the outcome of more court hearings.
This latest setback for Google comes almost a year after a US District Judge ruled that Google had acted illegally to maintain a monopoly on the search engine market.
Analysts at Forrester say advertisers are relatively unaffected by this latest decision.
“The DOJ failed to prove that Google has a monopoly on tech advertisers’ usage to buy display ads,” they said.
“In ruling for Google on the buy side, where Google fortifies tech acquired from DoubleClick and Admeld, Judge Brinkema found that advertisers choose among various ad platforms based on perceived return on ad spend.
“Advertisers continue to be dissatisfied by Google’s buy-side adtech’s lack of transparency and control, but Google doesn’t monopolise that market.”
The latest ruling relates to Google’s $31 billion adtech business, via Google Ad Manager.
“While this ruling will certainly have implications for its future, Google's adtech business is already in decline,” said Emarketer senior analyst Evelyn Mitchell-Wolf.
“The Google Network segment, which includes revenues generated by ad tech assets, has posted 10 consecutive quarters of negative growth, and we expect more of the same this quarter.”
YouTube plays an increasingly important role at its parent company and should help offset Network's slump.
“Google's core search business has yet to materially suffer from increased competition around generative AI, but as new rivals fine tune their offerings and attract a larger share of queries, double-digit growth for Google Search is not assured,”: said Mitchell-Wolf.
“Beyond ad revenues, Cloud should benefit from heightened demand for AI services, but may not recover from a disappointing Q4 given global business leaders' hesitance to rely on US-based tech while the world teeters on the brink of a trade war."
And the Google ruling comes as the Federal Trade Commission starts an antitrust case against Meta and seeks the separation of Instagram and WhatsApp from Facebook.
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