The DOJ sues Google over ad dominance, plans to break up company

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Zoom in / Let’s see, you landed on my “Google Ads” page, and with three houses… that’s $1,400.

Ron Amadeo / Hasbro

It was expected for some time, but today the Department of Justice and eight states are suing Google for its alleged dominance in the online advertising market. The government has a problem with Google’s position in “ad technology” or the tools used to automatically match advertisers with website publishers. In order to solve the problem, the DOJ has apparently told Google that it is considering breaking up the company.

“Today’s complaint alleges that Google has engaged in anticompetitive, exclusionary and unlawful conduct to eliminate or seriously reduce any threat to its dominance over digital advertising technologies,” said Attorney General Merrick Garland. “Regardless of industry and company, the Department of Justice will vigorously enforce our antitrust laws to protect consumers, preserve competition, and ensure economic justice and opportunity for all.”

The press release provides a brief overview of what the DOJ has a problem with:

Google’s anti-competitive practices included:

  • Attracting Competitors: Participating in a pattern of acquisitions to gain control of key digital advertising tools used by website publishers to sell advertising space;
  • Force takeover of Google tools: To tie website publishers to its newly acquired tools by limiting its unique and indispensable demand from advertisers to its Ad Exchange and then conditioning effective real-time access to its Ad Exchange to the use of its publisher’s ad server;
  • Disruption of Auction Competition: Limit real-time bidding on publisher inventory for its Ad Exchange and impair the Ad Exchanges’ ability to compete on the same terms as Google’s Ad Exchange; and
  • Auction manipulation: Manipulating the auction mechanisms on many of its products to insulate Google from the competition, reduce the size of competitors, and stop the rise of competing technologies.

Google is the largest digital ad broker in the US, but not by much. Axios reported that Google accounts for 28.8 percent of all digital advertising spending in the United States, followed by Meta with 19.6 percent. There are also many companies with great growth potential, such as Amazon, TikTok, Spotify, and Apple, but currently these companies tend to focus only on their specific platforms.

Enlarge / DOJ chart on Google’s ad business.

Ron Amadeo

However, it is not the overall market share that the DOJ is concerned about, but rather the market share of the individual tools used by publishers and advertisers. On the “sales” side (the side of sites that have ad space for sale – like this one), the DOJ says that Google’s “DoubleClick for Publishers” ad server has more than 90 percent market share. On the “buyer side” (the side of advertisers looking for a place to place their ads), the Google Ads network has an 80 percent market share for smaller businesses, while that Display & Video 360 has a market share of 40 percent to large advertising agencies market share percent. The Google Ad Exchange, which brings together sellers and buyers, has a market share of 50 percent.

advertising

As a settlement, the DOJ says: “To remedy Google’s anticompetitive conduct, the Department is seeking both just compensation on behalf of the American public and treble damages for losses suffered by federal agencies that overpaid for advertising of viewing on the web.” . This enforcement action marks the first monopoly case in nearly half a century in which the department has sought damages for a civil antitrust violation.” Basically, you want Google to pay you back.

Google has published a blog post stating that it disagrees with the government’s recent antitrust lawsuit. After the usual babble about how the market is more competitive than the plaintiff thinks, he adds a new threat not mentioned in the press release, saying, “The DOJ requests that we reverse two acquisitions made by -US regulators were audited 12 years ago (AdMeld) and 15 years ago (DoubleClick).In trying to reverse these two acquisitions, the DOJ is trying to rewrite history yet -detriment of publishers, advertisers and internet users.

It’s hard to believe that Google will ever be broken. We hear the threat often, but the last time the government broke up a company was almost 40 years ago. that day, the telephone company, Bell Systems, was split into AT&T, Verizon and Lumen Technologies/CenturyLink/Qwest. Since then, the US government’s desire to regulate companies has declined drastically, and today the threat is mostly just a starting point for negotiations.

In preparation for that lawsuit, Google told the DOJ last year that it was ready to “break up” its ad business by moving a unit from Google to its parent company Alphabet. It’s a move that seems unlikely to register when Google and Alphabet share the same CEO, CFO, stock ticker, and all share the same (very large) pile of cash.

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