US targets Google’s monopoly on the online advertising firm in latest Big Tech lawsuit

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The US Justice Department accused Google of Alphabet Inc on Tuesday of abusing its dominance in digital advertising by threatening to dismantle a key company at the heart of one of Silicon Valley’s most successful internet companies.

The government said Google should be forced to sell its ad manager suite, tackling a company that generated about 12 percent of Google’s revenue in 2021 but also plays a critical role in overall sales of the search engine and cloud company .

“Google has used anti-competitive, exclusionary and unlawful means to eliminate or severely mitigate any threat to its dominance over digital advertising technologies,” the antitrust complaint reads.

Google, whose advertising business accounts for about 80% of its revenue, said the government “doubled down on a flawed argument that would slow innovation, increase advertising costs and make it harder for thousands of small businesses and publishers to grow.”

The federal government has said its Big Tech investigations and lawsuits aim to level the playing field for smaller rivals from a group of powerful companies, including Amazon.com, Facebook owner Meta Platforms and Apple Inc.

“By suing Google for monopolizing ad technology, the DOJ today targets the core of the internet giant’s power,” said Charlotte Slaiman, director of competition policy at Public Knowledge. “The complaint details Google’s many anti-competitive strategies that have held back our Internet ecosystem.”

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Tuesday’s lawsuit by the administration of President Joe Biden, a Democrat, follows a 2020 antitrust lawsuit brought against Google during the tenure of Donald Trump, a Republican.

The 2020 lawsuit alleged antitrust violations in how the company gains or maintains its dominance with its online search monopoly and is expected to go to trial in September.

EIGHT STATES IN COURT

Eight states joined Tuesday’s lawsuit, including Google’s home state of California.

California Attorney General Rob Bonta said Google’s practices have “choked creativity in a space where innovation is critical.”

Colorado Attorney General Phil Weiser said Google’s dominance had led to higher fees for advertisers and less money for publishers offering ad space. “We are taking action by filing this lawsuit to break down Google’s monopoly and restore competition in the digital advertising industry,” he said in a statement.

Shares of Google fell 1.9 percent on Tuesday.

In addition to its well-known search feature, which is free, Google earns revenue through its interlocking ad technology businesses. The government requested the divestment of the Google Ad Manager suite, including Google’s Ad Exchange, AdX.

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Google Ad Manager is a suite of tools, including a tool that allows websites to list ad space for sale and an exchange that serves a marketplace that automatically matches advertisers to those publishers.

Advertisers and website publishers have complained that Google has not been transparent about where ad money goes, specifically how much goes to publishers and how much goes to Google.

The lawsuit raises concerns about certain ad technology products, where publishers and advertisers use Google’s tools to buy and sell ad space on other websites. That company was worth about $31.7 billion in 2021 or 12.3 percent of Google’s total revenue. About 70% of that revenue goes to publishers.

A divestment of ad technology “might not be a game changer, but it could be secretly important to Google’s ad-targeting capabilities,” said Paul Gallant of the Cowen Washington Research Group.

“It connects to all of Google’s other companies and connects them together. I think Google is more concerned about losing ad technology on the road than people might think,” Gallant said.

The company made a series of purchases, including DoubleClick in 2008 and AdMob in 2009, to make it a dominant player in online advertising.

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PROJECT POIROT

While Google remains by far the market leader, its share of digital ad revenue in the US is eroding, falling from 36.7% in 2016 to 28.8% last year, according to Insider Intelligence.

The Justice Department asked for a jury to decide the case, which was filed in the U.S. District Court for the Eastern District of Virginia.

The lawsuit exposes some of Google’s attempts to dominate the advertising market.

The complaint was about header bidding, a way companies could bypass Google to bid for ad space on websites.

It features a series of projects, including one called “Project Poirot”, named after Agatha Christie’s master detective, Hercule Poirot. The project “was designed to identify and effectively respond to ad exchanges that had used the header-providing technology.”

The 149-page complaint said Google doubled down on Project Poirot’s initial success in manipulating its advertisers’ spending to reduce competition from rival ad exchanges. Rivals AppNexus/Xandr lost 31% of DV360 advertisers’ spend, Rubicon would lose 22%, OpenX would lose 42% and Pubmatic would lose 26%, the complaint said.

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Lawsuits US InsurTech Tech Google

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