Justice Department Sues Google, Seeks Breakup Of Company’s Digital Advertising Technology

The Justice Department and a group of states have filed an antitrust suit against Google, claiming the internet giant has used its “stranglehold” over digital tools to quash threats to its dominance in the ad market.

Attorney General Merrick Garland and Jonathan Kanter, the chief of the Antitrust Division, formally announced the litigation at a press conference Tuesday.

In the lawsuit, filed in U.S. District Court in Virginia, the Justice Department said that Google’s plan “has been simple but effective: (1) neutralize or eliminate ad tech competitors, actual or potential, through a series of acquisitions; and (2) wield its dominance across digital advertising markets to force more publishers and advertisers to use its products while disrupting their ability to use competing products effectively.”

Read the lawsuit here.

The government is seeking the breakup of Google’s ad business. That means the divestiture of the Google Ad Manager suite, including both Google’s publisher ad server, DFP, and Google’s ad
exchange, AdX.

A spokesperson for Google said in a statement that the lawsuit “attempts to pick winners and losers in the highly competitive advertising technology sector. It largely duplicates an unfounded lawsuit by the Texas attorney general, much of which was recently dismissed by a federal court. DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees and make it harder for thousands of small businesses and publishers to grow.” Dan Taylor, Google’s vice president of global ads, also wrote a blog post pushing back against the government’s lawsuit.

The Justice Department also sued Google in 2020 over its control of the market for web search, and that litigation is ongoing. But this was the first major case against the tech giant by the Biden-era DOJ, which has sought to bolster antitrust enforcement.

The DOJ was joined by the attorneys general of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia in filing the lawsuit.

The lawsuit claims that Google’s monopoly on digital ad technologies — which publishers depend on to sell ads and advertisers use to buy spots — has stifled competition and has driven up advertising costs and reducing revenues for publishers.

“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,” Garland said in a statement.

The Justice Department cited Google’s control of “the digital tool that nearly every major website publisher uses to sell ads on their websites,” as well as the tool that allows advertisers to buy inventory. It also pointed to Google’s control of the largest advertising exchange, with a technology that runs real-time auctions to match buyers and sellers.

The alleged anticompetitive conduct includes acquiring rivals, forcing publishers to use its ad tools, distorting and manipulating auction competition.

The government also is seeking treble damages against Google for what it claims is the cost of inflated ad rates for government agencies.

Broadcasters have long complained about Google’s market power and that of other platforms. Alex Siciliano, senior communications strategist for the National Association of Broadcasters, said that they are still reviewing the complaint, but said that the dominant role of tech platforms “has come at a steep price for local news broadcasters, who lose an estimated $2 billion annually by providing their content to these platforms under ‘take it or leave it’ terms.”

Carl Szabo, vice president and general counsel of NetChoice, an internet industry trade group, said that Google’s share of the ad market has actually been decreasing. “When it comes to digital ads, prices are at historic lows, and quality has never been higher. This is clear evidence of a highly competitive marketplace,” he said.