DOJ Sues Google Over Ad Dominance

The US Dept. of Justice (DOJ) on Tuesday filed a lawsuit against Alphabet subsidiary Google, alleging the company abuses its dominance in the digital advertising sphere and asking the court to force it to sell its ad manager suite.

DOJ Sues Google Over Ad Dominance
Image credit: Getty Images [via Forbes]

Facts

  • The US Dept. of Justice (DOJ) on Tuesday filed a lawsuit against Alphabet subsidiary Google, alleging the company abuses its dominance in the digital advertising sphere and asking the court to force it to sell its ad manager suite.
  • In its second anti-trust lawsuit against Google - the first filed during the Trump admin. regarding alleged monopolistic search engine practices - the DOJ has been joined by eight states, including Google's home state of California. Texas has filed a separate ad business suit against the company.
  • The complaint argues Google has "corrupted legitimate competition in the ad tech industry" by inserting "itself into all aspects of the digital [ad] marketplace." It continues, saying it uses its dominance to "funnel more transactions to its own ad tech products where it extracts inflated fees."
  • The DOJ further asserts that Google has unlawfully monopolized the ad market through acquiring competitors, including its 2008 acquisition of the ad server DoubleClick and subsequent rollout of its technology to bid for ads on webpages.
  • Roughly 80% of Google's revenue comes from digital ads, with the company expecting to generate $73.8B this year. However, its portion of the digital ad market has reportedly shrunk from 36.7% in 2016 to 28.8% last year, with Google arguing it does face competitors such as Facebook, AT&T, and Comcast.
  • Alongside this lawsuit, Google will simultaneously face the suit filed by Texas, the Trump-era suit set to go trial in September, and another suit filed by 36 states last July alleging it broke antitrust law regarding purchases on its Play store app.

Sources: Reuters, CNBC, CNET, Breitbart, New York Post, and Forbes.

Narratives

  • Establishment-critical narrative, as provided by Tech Radar. Though Google will point to recent economic slumps and downsizing as proof of innocence, the company's monopolistic practices began over a decade ago. Google eliminates competition through acquisitions and subsequently forces advertisers to pay more creators to make less, all while boosting its profits year over year. The government has ignored this growing monopoly for years and should finally break its stranglehold on the digital ad market.
  • Pro-establishment narrative, as provided by Yahoo Finance. While prosecutors may be able to point to certain questionable business practices used by Google, trying to break the company up through anti-trust legislation is a dead end. It will be almost impossible to prove a monopoly, similar to what happened to Microsoft years ago when the DOJ sued them for anti-trust violations. The government should demand changes to particular business practices rather than trying to take down the world's most popular search engine