Yahoo Finance Nine states join DOJ lawsuit to breakup Google's ad tech tool stranglehold
Nine additional US states joined an antitrust lawsuit against Google (GOOG, GOOGL) that accuses the company of illegally monopolizing the online ad tech market and seeks to break up the tech giant’s stronghold.
The US Department of Justice and eight states first brought the civil lawsuit in January. On Monday, the agency announced that attorneys general for Arizona, Illinois, Michigan, Minnesota, Nebraska, New Hampshire, North Carolina, Washington, and West Virginia had joined the litigation. Virginia, California, Colorado, Connecticut, New Jersey, New York, Rhode Island, and Tennessee joined the DOJ in the original filing.
“We look forward to litigating this important case alongside our state law enforcement partners to end Google’s long-running monopoly in digital advertising technology markets,” Doha Mekki, principal deputy assistant attorney general for the Justice Department’s antitrust division, said in a statement.
The Justice Department and attorneys general allege that Google's suite of online ad tech tools — technology to buy, sell and serve ads online — prevents competitors from entering the market and blocks publishers from monetizing their own content. The department further claims that Google should be required to divest a host of entities that allow it to carry out the allegedly offending behavior.
The DOJ wants Google to divest, at the least, its Google Ad Manager suite, including both Google’s publisher ad server, DFP, and Google's ad exchange, AdX.
"Google’s anticompetitive behavior has raised barriers to entry to artificially high levels, forced key competitors to abandon the market for ad tech tools, dissuaded potential competitors from joining the market, and left Google’s few remaining competitors marginalized and unfairly disadvantaged," the complaint states.
The suit goes on to allege that Google is using its outsized market share to take supra-competitive profits for itself.
“This lawsuit attempts to pick winners and losers in the highly competitive advertising technology sector," Dan Taylor, Google's vice president of global ads told Yahoo Finance. "It largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was dismissed by a federal court." Taylor said the arguments advanced in the suits by the DOJ and the state attorneys general would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.
The January lawsuit came more than two years after the Justice Department and a group of state attorneys general joined in a separate antitrust suit alleging that Google's search and search advertising businesses violate U.S. antitrust laws.
Google’s digital advertising businesses have become antitrust targets due to their unrivaled size and volume. The company holds a commanding lead in the $278.6 billion online ad revenue space, of which Google's revenues in 2022 totaled approximately $224.5 billion.
The company controls some of the most important links in the online advertising chain — specifically its DoubleClick platform, a premier tool for online publishers, helping them create, manage, and track online marketing campaigns.
In the first three quarters of 2022, Google's ad tech division generated $24.3 billion in sales. As for Google’s share of the US publisher ad server market, the Justice Department alleges that Google's market share has remained above 90% for "many years."
Big target
Google has for years also faced scrutiny from domestic and overseas lawmakers and regulators concerning its dominance across online and mobile markets.
In the U.S., the firm has faced investigations by the DOJ, the U.S. Federal Trade Commission, and state attorneys general over suspicions that the company’s search and digital advertising businesses operate as illegal monopolies.
In 2021, dozens of attorneys general sued the company, alleging that it was operating illegal monopolies in the market for Android app distribution by imposing technical barriers that prevent third parties from distributing apps outside the Play Store.
Over a decade ago, the company was fined roughly $10 billion (8.6 billion euros) by the European Commission, the European Union’s antitrust watchdog. Those fines resulted from three separate antitrust violations alleged by the Commission.
In 2017, the company was hit by the Commission for allegedly abusing its market dominance in search, and again in 2018 for allegedly abusing its market power in the mobile space by preloading its own apps on new Android phones. And in 2019, the company was again fined for limiting its rivals from working with companies that already had deals with Google’s AdSense platform.
Prior to the lawsuit filed in January, Alphabet reportedly sought to quell the DOJ's antitrust concerns by offering to split up its ad auction and ad placement businesses. That offer, according to The Wall Street Journal, was to maintain the would-be separate entities under the company's larger, parent company, Alphabet.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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