The DOJ and eight states shake up Google by filing a suit against its digital advertising business. Let’s explore the details of the lawsuit with Circle of Legal Trust.
Lawsuit Filed by Justice Department Against Google for Dominating Digital Advertising Technologies
On January 24, 2023, the United States Department of Justice (DOJ) filed an antitrust lawsuit against one of the Silicon Valley tech giants, Google, for illegally monopolizing the online ad tech industry.
It is the second lawsuit brought by the feds (the first lawsuit brought by the Trump Administration) against the company that already has several allegations of choking off its competitors.
Google Continues to Corrupt the Online Advertising Market with Its Anti-competitive Practices, Lawsuit Claims
Attorney General Merrick Garland addressed the issue in a recent press conference, stating that the company continues to carry out anti-competitive practices, such as forcing advertisers to use their tools.
The antitrust lawsuit filed in the Eastern District of Virginia explains how Google has corrupted legitimate competition in the ad tech industry and made aggressive mergers in a bid to knock out competitors, monopolize the online ad space, and force advertisers and other companies to use their products and services to facilitate digital advertising.
DOJ Expresses Concerns over Google’s Cut for Online Advertising
The DOJ also took jabs at Google’s revenue practices, where the company takes 30% on all digital adverts placed through the platform.
The antitrust lawsuit reveals that Google keeps a minimum of 30 cents per advertising dollar spent by companies and, in some cases, even higher as a fee for using the company’s tools.
According to the lawsuit, the federal agencies have also become victims of the search giant’s dominance and anti-competitive practices. Federal entities like the military and others have spent more than $100 million on advertising since 2019, with the departments alleging “manipulated advertising prices.”
Such litigation against a large company with billions of dollars in resources and a strong legal team can take time to reach a verdict. However, prosecutors have already started taking action by asking the federal judge to coerce Google into splitting its advertising segment from the rest of the company.
The Justice Department did not immediately respond to email requests for comments on the lawsuit, nor did Google provide a statement on its “anticompetitive” practices.
One Industry Behemoth Already Broken in the past by Federal Government
On January 8, 1982, the federal government split up Bell System to effectively break the company’s monopoly over local telephone services in the United States.
The breakup increased competition, allowing many companies to enter the long-distance telecommunications market, such as Sprint and MCI. According to Bloomberg, suing Google would be the first time since the 1980s that the Justice Department felt the need to dismantle a large company.
Google Responds to Allegations of Violating Antitrust Laws
Currently, there are three prominent players in the digital advertising market, and these include:
- Google (29%)
- Meta (20%)
- Amazon (11%)
In response to the antitrust suit filed and the statements made by the DOJ, Google’s spokesperson stated that there are many other companies in the digital advertising marketplace offering their services and that breaking up Google would lead to extremely high advertisement prices.
The Google Spokesperson referred to the DOJ’s statements as flawed and said such actions would hinder innovation, cheap advertising costs, and expansion of local businesses.
How Google Created an Anti-competitive Space: Federal Authorities Share Their Opinions
According to federal authorities, Google has strategically made business decisions to create an anti-competitive digital advertising marketplace.
In 2017, the tech giant acquired DoubleClick, a company that produced the most used advertising tools, for $3.1 billion. The acquisition allowed Google access to website publishers and already developed ad-serving technology that these publishers used.
Acquiring DoubleClick gave Google the power to sell ads to website publishers and control the high-tech tools the publishers continued to use.
The prosecutors allege that the company abused the system by rigging it in its favor and carrying out a systematic campaign of aggressive acquisitions. They believe that such acquisitions like DoubleClick allowed Google to lock up customers in a system where they couldn’t seek alternatives.
The antitrust suit references the internal communication made by one of Google’s executives, who compared the company’s power and influence over the ad-selling process as “if Goldman or Citibank owned the New York Stock Exchange.”
DOJ Files 2nd Google Suit in Latest Adtech Challenge: Is It the End for Google?
It could be challenging to sue Google, but it’s not impossible, as we’ve seen how the federal government broke Bell System in the past. However, the road can be challenging, and there is no certainty whether the DOJ will prevail in bringing down Google.
Currently, 80% of the tech giant’s revenue comes from advertising, and to cut their livelihood, means a legal war that could go on for years. Let’s not forget the unlimited financial resources Google has to fight the antitrust lawsuit in the federal court.
It’s also important to note that, as Americans, we must promote businesses rather than create economic uncertainty that may unravel following such lawsuits. There is an antitrust suit against Apple as well.
If we end up breaking these companies, will it work as efficiently as before? Will it help provide the employment that it does today? There are many questions the DOJ and the current Biden Administration need to ask themselves before they spearhead such lawsuits.
Talk to Circle of Legal Trust
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