What to know about the DOJ’s lawsuit against Google’s digital ad business
The Department of Justice (DOJ) filed its second lawsuit against Google this week, highlighting the ongoing bipartisan angst from regulators and lawmakers against tech giants.
The Biden administration’s case, joined by a handful of states, seeks to break up Google to untangle what the antitrust enforcers say is an anticompetitive dominance in the digital ad market.
Google denied the allegations and argued they’re similar to ones made in a separate Texas-led case. The government faces a tough road ahead in its challenge. But it adds to the growing courtroom battles facing Google and illustrates how federal and state antitrust enforcers are plowing ahead with plans to crack down on tech giants’ dominance.
Here’s what to know about the lawsuit.
What do the DOJ and the states allege in the suit?
At issue: The ads users commonly see when they are using the internet.
The DOJ and a handful of states argue that Google used a “simple but effective” strategy to acquire power in the digital ad space. The complaint alleges Google eliminated ad tech competitors through acquisitions and wielded its dominance to “force more publishers and advertisers” to use its products while “disrupting their ability to use competing products effectively.”
“This is a market that involves billions of transactions a day. Basically every time a user visits a website there’s an exchange that Google owns that connects publishers, who have their ad space available on a server that Google owns, and advertisers, who have their ads on a server that Google also owns,” said Katherine Van Dyck, senior legal counsel at the American Economic Liberties Project.
“Google owns all three of these, and it has created a system that basically makes entry into the market nearly impossible,” she added.
A key component of the complaint surrounds Google’s acquisition of ad tech firm DoubleClick in 2008, which became Google Ad Manager. The lawsuit seeks to force Google to divest the Ad Manager suite, which could be a major blow to the tech giant’s business.
Part of Google’s defense against the case is highlighting that the acquisitions were cleared by federal regulators at the time.
“In seeking to reverse these two acquisitions, DOJ is attempting to rewrite history at the expense of publishers, advertisers and internet users,” Google’s vice president of global ads, Dan Taylor, said in a blog post.
How does this suit differ from other cases facing Google?
The case filed Tuesday is the second brought by the DOJ, following a lawsuit the Trump administration filed in October 2020.
The first DOJ case targeted Google’s dominance in the search market.
“Google is a huge company, it looks like DOJ was investigating multiple areas where [there] was concern about anticompetitive conduct,” said Charlotte Slaiman, competition policy director at Public Knowledge, on Wednesday.
“If you read the 150-page complaint from yesterday, I think it’s clear there’s a lot to go through, so it makes perfect sense to me that [there] needs to be multiple cases,” Slaiman added.
Google is also facing a case led by Texas Attorney General Ken Paxton (R) that also targets the company’s dominance in the digital ad market.
Part of Google’s argument against the new lawsuit is that the case “largely duplicates” what the company deemed Texas’s “unfounded lawsuit.”
A federal district court struck down a portion of the case involving allegations about a deal between Google and Facebook parent company Meta, but is largely allowing that case to proceed.
In July, a bipartisan coalition of state attorneys general filed an antitrust lawsuit against Google targeting the company’s control over the Android app store. The case involves yet another sector of Google’s dominance.
Google has also pushed back on the allegations raised in that case and argued its app system provides “more openness and choice than others.”
How is the tech industry responding?
In addition to Google’s argument over how regulators approved its previous acquisitions — of DoubleClick in 2008 and the firm Ad Meld in 2011 — the tech company said its tools actually help advertisers bid “more efficiently” and help publishers “make more money,” according to a fact sheet compiled by Google.
Google’s fact sheet also stated that it is not required under law to “give business to rivals,” which is what Google said the DOJ is “trying to force” it to do by saying Google should bid on rival ad exchanges.
“This claim misses the point that we’ve built our advertising technologies to interoperate with 80 competing platforms for publishers and even more for advertisers. Many publishers and advertisers who use our services also use rival platforms,” Google said in the fact sheet.
The company and tech industry groups also are citing what they see as an overall economic downturn, recent layoffs and growing competition in the digital ad space as reasons to criticize the DOJ’s decision to sue.
Other companies, including Meta, Apple and Amazon, have started to take up a larger share of the digital ad market, said Adam Kovacevich, president and CEO of Chamber of Progress. The tech group names Google, Meta, Apple and Amazon amongst its corporate partners.
“Overall, the online advertising market just shrunk because of the economy and a lot of advertisers are pulling back. I think that economic reality is going to be very much in the background of this case while it unfolds,” Kovacevich told The Hill.
Kovacevich also called out the lawsuit being filed on the heels of Google’s 12,000 staff layoffs.
Taylor, Google’s global ads vice president, also highlighted that argument in his blog post, stating “antitrust cases shouldn’t penalize companies that offer popular, efficient services, particularly in difficult economic times.”
Slaiman said there is not much weight behind that argument.
“I don’t think anyone would say a company having a round of layoffs means they are not subject to the antitrust laws,” she said.
What was the response from Congress?
Lawmakers on both sides of the aisle cheered the DOJ’s decision to sue Google. The action brought together an unlikely group of senators — Democrats Amy Klobuchar (Minn.) and Richard Blumenthal (Conn.) along with Republicans Ted Cruz (Texas) and Mike Lee (Utah) — who issued a joint statement that they are “encouraged” by the DOJ’s “efforts to protect competition in online advertising.”
On the House side, Reps. Jerry Nadler (D-N.Y.), David Cicilline (D-R.I.) and Ken Buck (R-Colo.) applauded the DOJ’s action.
The bipartisan cheers from Congress could also indicate some legislative action moving forward this Congress, although the split control between the House and Senate still poses roadblocks.
Lee, Cruz, Klobuchar and Blumenthal in their statement said they are “committed to a legislative solution that goes beyond just one company to ensure that one monopolist isn’t replaced by another and that all consumers benefit from competition and transparency.”
Last year, the four senators backed a bill put forward by Lee that aimed to increase competition and transparency in the digital advertising market.
Two other high-profile antitrust bills targeting tech giants, one aimed at limiting companies from preferencing their own products and services and one aimed at increasing competition in the app market, advanced out of the House and Senate judiciary committees with bipartisan support but failed to make it across the finish line before the end of the year.
Slaiman said the “added legitimacy” of the DOJ highlighting the allegations and laying them out “clearly and compellingly” could boost support in Congress for the proposals, especially amongst lawmakers that “have been on the fence.”
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