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In a nutshell: In a landmark antitrust trial set to start later today, the US government is targeting Google's highly profitable advertisement tech business. The lawsuit, filed in 2023, comes after a combined investigation by the US government and more than a dozen states. The case focuses on a $31 billion component of Google's ad business responsible for placing banner ads on millions of websites.
Opening statements before District Judge Leonie Brinkema of the US District Court for the Eastern District of Virginia start later today. The BBC notes that the Justice Department plans to argue that Google's parent company, Alphabet, illegally operates a monopoly in the online advertising market. However, Alphabet denies the allegations, claiming that its success is due to the "effectiveness" of its services.
The Justice Department claims Google established its monopoly through the anti-competitive acquisitions of smaller ad-tech rivals and even bullying website publishers into using its ad products. Google is also said to have unethically controlled key businesses in each part of the advertising supply chain, thereby driving up ad rates for advertisers while reducing the payouts to website owners.
Pointing out Google's systematic abuse of the online ad business, the DoJ will ask the court to break up the company's ad-tech monopoly. The agency believes a breakup would create new opportunities for Google's smaller competitors and incentivize new players to enter the market. It will also be better for both advertisers and publishers.
However, Google claims it is just one of the several hundred companies in the online ad business, including other tech giants like Meta, Apple, Amazon, and TikTok. Describing the monopoly allegations as "unfounded," the company claimed that competition in the digital ad space is increasing - not decreasing as the lawsuit suggests - as more companies enter the lucrative sector.
Google also pointed out that other companies like Comcast, Disney, Walmart, and Target are also investing in building their own online advertising technology services alongside the tech giants. The company added that many other specialized digital advertising firms are also doing roaring business, including AppLovin, Criteo, Index Exchange, Pubmatic, Magnite, MediaMath, OpenX, The Trade Desk, Unity, and more.
Given the existence of hundreds of competitors, Google will argue that breaking up its ad business would only benefit the other big ad-tech players while harming smaller websites that rely on its tools.
The latest antitrust trial against Google comes a month after Alphabet lost a separate case against the DoJ for operating an illegal monopoly with its search business. According to the US District Court for the District of Columbia, the company violated US antitrust laws with its search business by spending billions of dollars to illegally secure a dominant position as the world's leading default search provider on smartphones and web browsers at the cost of smaller competitors like Bing, Yahoo, and DuckDuckGo.