DOJ sues Google again, attacking its dominance of online ads

The US Department of Justice and eight states on Tuesday sued Google for its online advertising businessaccusing it of having abused its monopoly power to the detriment of both advertisers and publishers.

The DOJ complaint — which you can read in full below — was filed in federal court in Virginia. It alleges that Google has “corrupted legitimate competition in the ad-tech industry” by taking control of online advertising systems and inserting itself “into all aspects of the digital advertising market”. Google would have done this by eliminating competition through acquisitions and exploiting its dominant position to pressure advertisers to use its products rather than those of others. The complaint only names Google as a defendant and not individuals. It’s also asking Google to sell off some of its ad tech business.

The Department of Justice also said that Google punishes websites that “dare to use competing ad technology products” and uses its dominance in ad technology to “route more transactions to its own ad technology products, where it extracts inflated fees to line its own pockets at the expense of the advertisers and publishers it is supposed to serve.”

The case is the latest example of government efforts to rein in Big Tech. The most financially successful companies on the planet wield immense power over our lives and businesses around the world.

Google denied the allegations.

“Today’s lawsuit by the DOJ attempts to pick winners and losers in the highly competitive ad tech industry,” Dan Taylor, head of Google Ads, said in a blog post. The Justice Department lawsuit largely replicates an “unfounded lawsuit” by Texas Attorney General Ken Paxton that was dismissed in federal court, Google argued. The Justice Department case is flawed and “will slow innovation, increase advertising costs and make it harder for thousands of small businesses and publishers to grow,” Taylor said.

The Justice Department did not respond to a request for comment.

While there are some similarities to the Texas case, the Justice Department conducted its own years-long investigation that showed Google maintained “numerous monopolies,” Assistant Attorney General Jonathan Kanter said Tuesday during a hearing. ‘a press conference.

The Justice Department lawsuit is a rare case in which the Department called for the dissolution of a major corporation. Other examples include his confrontations with mainframe maker IBM in the 1970s, telephone giant AT&T in 1982 and Windows creator Microsoft in 2000.

It comes as governments around the world seek to rein in Big Tech. Over the past year, the United States Senate has considered the US Online Choice and Innovation Act to curb the influence of Amazon, Apple and Google in digital marketplaces. Last year, Google was fined in France for tracking users and agreed to a $391.5 million settlement with state attorneys general over whereabouts practices.

Kanter said Google’s dominance in digital ads is equivalent to banking firms like Goldman Sachs or Citibank owning the New York Stock Exchange. Google has engaged in this behavior for 15 years, inflating advertising costs, cutting website revenue, stifling innovation and “flattening our public market for ideas,” he said. Kanter also alleged that Google’s behavior harmed the US government and military.

Among the examples of alleged abuse, Kanter told Google:

  • Using tied arrangements to lock content creators into Google’s system.
  • Manipulated ad auctions by giving themselves first and last look advantages over the auction process.
  • Prevent websites from using competing technologies and punish those who have tried.
  • Collect and use auction data from rivals.

Kanter also used information from Google documents and employees to assert the company’s dominance:

  • A Google employee said the company’s ad exchange was an “overbearing middleman.”
  • Senior executives said switching ad servers for publishers is “a nightmare” that “takes an act of God.”
  • A Google official said, “Our goal should be all or nothing. Use Google’s ad exchange or don’t have access to our advertisers’ request.”
  • A Google employee said the company “overcharges” advertisers by $3 billion a year, funneling the money to publishers to get them to stick with Google’s ad technology.
  • A Google executive has detailed steps to “dry out” rivals.

The Computer and Communications Industry Association, a technology lobby group, sided with Google despite some previous support for “appropriate” government intervention: “We find this lawsuit and the sweeping structural remedies it proposes unwarranted. Digital services compete vigorously for advertising dollars on screens of all sizes, and the complaint appears to ignore these dynamics as well as macro trends in the global advertising market,” the group said in a statement.

This is the second antitrust lawsuit filed by the Justice Department against Google, but the first from the Biden administration. A October 2020 cases filed under the Trump administration alleged that Google blocked its competitors by making deals with Apple and Samsung to be the default search engine on their devices.

Google is also facing a Texas-led antitrust lawsuit, as well as 16 states and territories, alleging the search giant worked with Facebook to give the social network an advantage in online ad auctions. The Justice Department, under the Clayton Antitrust Act, is also authorized to sue if the federal government believes it has been wronged.

Last year, Google tried to push back the Justice Department’s lawsuit by proposing to spin off its ad tech businessreported the Wall Street Journal.

CNET’s Stephen Shankland contributed to this report.

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