Mié. Feb 8th, 2023

The US Justice Department filed its second antitrust lawsuit Tuesday against Google in just over two years. It’s the latest sign that the US government isn’t backing down on cases against tech companies, even in light of a mixed court record in antitrust lawsuits.

Google shares fell 1.3% on Tuesday afternoon.

This lawsuit, which focuses on of Google online advertising business and seeks to have Google divest parts of the business, is the first brought against the company under the Biden administration. the Department previous demand, filed in October 2020 under the Trump administration, accused Google of using its alleged monopoly power to eliminate competition from internet search through opt-out agreements. that case is expected to go to trial in September.

Google’s advertising business generated $54.5 billion in the quarter ended September 30 from search, YouTube, Google Network Ads and other advertising.

Google also faces three other antitrust lawsuits from large groups of state attorneys general, including one focused on his advertising business run by Texas Attorney General Ken Paxton.

The states of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia joined the DOJ in the latest lawsuit.

Google’s advertising business has drawn criticism because the platform operates on multiple sides of the market — buying, selling, and trading ads — giving it unique insight into the process and potential leverage. The company has long denied that it dominates the online advertising market, pointing to market share held by competitors, including GoalFacebook’s

In their lawsuit, the Justice Department and the states argue that Google sought to control all sides of the market, realizing that it «could become ‘the primary and final location for all ad serving.'»

“Google would no longer have to compete on the merits; it could simply establish the rules of the game to exclude rivals”, they allege.

According to the complaint, even one of Google’s own advertising executives questioned the wisdom of Google’s extensive ownership of the space.

″[I]Is there a deeper problem with us owning the platform, the exchange, and a huge network? supposedly asked the executive. «The analogy would be if Goldman or Citibank owned the New York Stock Exchange.»

The harm from Google’s practices, they allege, is that «website builders earn less and advertisers pay more than they would in a market where unrestrained competitive pressure could discipline prices and lead to more innovative ad technology tools.» which would ultimately result in higher quality. and lower cost transactions for market participants”.

As a result, they added, more publishers are being forced to turn to alternative models such as subscriptions to finance their operations.

Another part of Google’s strategy, the complaint alleges, was to acquire other companies to increase its power in the advertising market and «set the stage for Google’s subsequent exclusionary conduct throughout the advertising technology industry.» Those acquisitions included a 2008 purchase of publisher ad server DoubleClick and a «fledgling ad exchange» that would become Google’s AdX. This allowed Google to require publishers in some cases to use all of its tools to gain access to anyone, rather than working with rival tools for parts of the online ad buying process.

«In effect, Google was robbing Peter (the advertisers) to pay Paul (the publishers), while also charging a hefty transaction fee for its own prime position in the medium,» the executors allege. “Instead of helping fund website publishing, Google was diverting ad dollars to itself by imposing supra-competitive fees on its platforms. A rival publisher’s ad server would not be able to compete with Google’s inflated ad prices, especially without access to demand from Google’s captive advertisers from within Google Ads.»

Google continued to identify potential threats to its dominance, the complaint alleges, such as when performance management tools became available to help publishers find better prices for their inventory in real time outside of Google’s ecosystem.

“Then, in response, Google employed a familiar tactic: acquire and then extinguish any competitive threat,” the plaintiffs wrote, pointing to Google’s acquisition of performance manager AdMeld in 2011. After the settlement, they allege, Google changed its contracts. from AdX to block publishers from using other platforms, forcing their own exchange to compete with others in real time.

Google later became aware of another attempted workaround called «header bidding,» in which publishers could add code to their own websites to allow non-Google ad exchanges to bid on inventory before for Google’s ad exchange preferences to be activated, allowing ad exchange rivals to return to the market. in a significative way. Google executives reportedly described the practice as an «existential threat.»

Google marketed its own «Open Bid» tool as an alternative, which the complaint called a «Trojan Horse.» Publishers and ad exchanges that participated in the program had to give Google visibility in their auctions, including rival exchange bids. That allowed the Google ad exchange to retain «a guaranteed seat in each auction, regardless of whether the Google ad exchange offers the best match between advertisers and publishers,» the complaint alleges.

Google also feared advertising competition from Facebook and Amazon, the Justice Department and the states allege, and in response, it agreed with Facebook to grant it «preferential open-bid auction terms…in exchange for spending and pricing commitments designed to drive more of advertiser spending.» Facebook captives on Google platforms». The complaint alleges that Google sought a similar agreement with Amazon, but was not as successful.

«Today’s DOJ lawsuit attempts to pick winners and losers in the highly competitive ad-tech industry,» a Google spokesperson said in a statement. “It largely doubles down on an unfounded lawsuit by the Texas Attorney General, much of which was recently thrown out of federal court. The DOJ is doubling down on a flawed argument that would slow innovation, increase advertising fees, and make it harder for thousands of small businesses and publishers to grow.”

The progressive head of the Justice Department’s Antitrust Division, Jonathan Kanter, was recently cleared to work on Google-related matters. The Wall Street Journal reported earlier this month. Bloomberg It had previously reported that Kanter was not allowed to work on company-related matters while the department considered Google’s request to review its grounds for recusal. Before his time in government, Kanter represented some of Google’s rivals and critics, including Yelp Y news corporation.

A Google spokesperson said in a statement last year that Kanter’s past work and statements «raise serious concerns about his ability to be impartial.»

Google isn’t the only tech giant that has come under scrutiny from the federal government. At the Federal Trade Commission, Goal is also the subject of two antitrust lawsuits, as is Microsoft proposed acquisition of Activision.

Google and other technology companies have also faced increased scrutiny from abroad, particularly in Europe, where Google has also fought multiple antitrust cases and new regulations threaten major changes in technology business models.

The company reports earnings on February 2.

Por admin