The US government sued Google on Jan. 24, claiming the company abused its monopoly power in digital advertising to disadvantage competitors. The US Department of Justice and eight state attorneys general filed the lawsuit in federal district court in Northern Virginia.
“Google’s anti-competitive behavior has raised barriers to entry to artificially high levels, forced key competitors to abandon the market for ad tech tools, dissuaded potential competitors from joining the market, and left Google’s few remaining competitors marginalized and unfairly disadvantaged,” the government wrote in its complaint (pdf).
This is the second federal antitrust lawsuit filed against Google in the past three years. In 2020, former president Donald Trump’s Justice Department sued the company for abuse of monopoly power in internet search and search-based advertising. The case is headed to trial in September.
The new lawsuit asks for “structural relief” as part of the damages, which means a federal judge will consider breaking up Google’s advertising division if the suit is successful.
Tackling Google’s digital ad dominance
Google is one of the most important companies in the world of digital advertising. In the third quarter of 2022 alone, Google made $54 billion in advertising revenue. Google and Facebook—largely thought of as a “duopoly” in online advertising—comprise about 50% of the market, according to Insider Intelligence, a market research firm. Google alone controls 28%, though that number is expected to fall to 26% by 2024, driven in part by Amazon and TikTok’s ascendance.
The Justice Department said in a press release that Google’s ad tech stack—its tools for ad buyers and sellers—is virtually unavoidable for businesses operating on the internet. Google has spent 15 years “driving out rivals, diminishing competition, inflating advertising costs, reducing revenues for news publishers and content creators, snuffing out innovation, and harming the exchange of information and ideas in the public sphere,” Jonathan Kanter, president Joe Biden’s top antitrust enforcement lawyer, said in a statement.
Google’s $3.1 billion 2007 acquisition of the adtech company DoubleClick, a competitor at the time, is often cited as the pivotal moment that led to the company’s online ad dominance.
“The DoubleClick acquisition vaulted Google into a commanding position over the tools publishers use to sell advertising opportunities, complementing Google’s existing tool for advertisers, Google Ads, and set the stage for Google’s later exclusionary conduct across the ad tech industry,” the government wrote in its complaint.
That merger was approved by the US Federal Trade Commission, which shares antitrust oversight with the Justice Department.
Google pushed back against the government’s charges.
“Today’s lawsuit from the DOJ attempts to pick winners and losers in the highly competitive advertising technology sector,” a company spokesperson told Quartz. “It largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was recently dismissed by a federal court. DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.”
In 2020, Texas attorney general Ken Paxton led a group of state attorneys general in suing Google for anti-competitive practices in its online advertising business. However, Google succeeded in having one of the charges thrown out—one that concerned a cooperation agreement with Facebook parent company Meta.
In 2021, 36 states sued Google for anti-competitive practices in running its mobile app store for Android phones. That case is ongoing.