US argues Google created ad tech monopoly
By David McCabe
The Justice Department told a federal judge Monday that Google had built a monopoly in lucrative technology that delivers online ads, kicking off a second federal antitrust trial against the tech giant amid mounting scrutiny of the industry.
Google used its acquisition in 2008 of advertising software company DoubleClick to build its dominance in technology that auctions off ads on webpages as users visit, Julia Tarver Wood, the government’s lead trial lawyer, said in opening statements. Google now has an 87% market share in that ad-selling technology, allowing it to charge higher prices and take a bigger portion of each sale, she said, harming news publishers and other website owners.
Google used its size and influence to lock out competitors and rigged the rules to pad its bottom line, Wood said in the U.S. District Court for the Eastern District of Virginia.
“Google is not here because they are big,” Wood said. “They are here because they used that size to crush competition.”
The trial stems from a case — U.S. et al v. Google — that the Justice Department filed against Google last year. In its suit, the agency accused the internet giant of abusing control of its ad technology and violating antitrust law. It is the second federal antitrust trial that the Silicon Valley company has faced in a year, with a federal judge ruling in August in the other case that Google had illegally maintained a monopoly over online search. That judge is now considering how to resolve those concerns, which could include ordering Google to sell off parts of its business.
The cases against Google are part of a growing push by regulators to rein in Big Tech’s power, which shapes commerce, information and communication online. The Justice Department has also sued Apple, arguing it made it difficult for consumers to leave its tightly-knit universe of devices and software. The Federal Trade Commission has sued Amazon, over squeezing small businesses, and Meta, over killing rivals when it bought Instagram and WhatsApp.
Google has denied the ad-tech allegations, saying the government was trying to disrupt a system that has benefited small businesses that run ads and people who create content.
The trial that began Monday focuses on advertising technology that largely operates out-of-sight of consumers. Over time, Google built a suite of products to run auctions that sell slots for ads on webpages. After buying DoubleClick, Google wove the company’s technology into its offerings.
While this system has become less central to Google’s revenues in recent years, the government contends that business segment earned more than $31 billion in 2021.
Google controls every link in a chain of software that sells ad space online, Wood told Judge Leonie Brinkema on Monday.
Google drove customers to use its products, even when websites could have made more money selling their ads through its rivals’ technology, she said. That hurt the websites, such as news publishers, that rely on ad sales for revenue, she said. She argued that without that revenue, websites might be forced to charge for content or shut down.
Google’s lead lawyer, Karen Dunn, countered that customers had plenty of options for placing ads online. But they chose Google’s products on the merits, she said. Google will show the judge, Dunn continued, that the company is “one big company among many others” that competes in the ad tech business.
Dunn also argued that the scope of the case is incorrect. It focuses on webpage ads in an era when online ads are sold across a wide range of platforms, including social media sites and mobile apps.
The government’s case flies in the face of long-standing legal precedents set by the Supreme Court, Dunn argued. (The lawyer, who has been preparing Vice President Kamala Harris for Tuesday’s presidential debate, left the courtroom after her opening statement. She declined to say where she was going.)
The trial is expected to play out for at least the next four weeks. The judge may hear testimony from Google employees, including YouTube’s CEO, Neal Mohan, and representatives of media companies, including The New York Times Co.
The case against Google highlights the growing concerns around competition and market dominance in the digital advertising industry. If a single company controls too much of the ad tech ecosystem, it can limit opportunities for publishers, advertisers, and smaller businesses trying to compete fairly.
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It will be interesting to see how this case shapes the future of online advertising and competition policies worldwide.
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