DOJ sues Google for its dominance in the online advertising market

(CNN) The Justice Department and eight states sued Google on Tuesday.

Google is accused of hurting the competition with its dominance in the online advertising market, and calls are mounting for it to break up.

The move marks the Biden administration’s first blockbuster antitrust case against a big tech company. The eight states joining the lawsuit include California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia.

The new complaint significantly increases the risks to Google emanating from Washington, where lawmakers and regulators have frequently raised concerns about the tech giant’s power but have so far failed to pass new laws or regulations that could slow down the company or others. their peers.

For years, Google’s critics have argued that the company’s extensive role in the ecosystem that allows advertisers to place ads and publishers to offer digital ad space represents a conflict of interest that Google has exploited in an anti-competitive manner.

In Tuesday’s complaint, a copy of which was seen by CNN, the Justice Department alleged that Google illegally actively maintained that domain by engaging in a campaign to thwart competition. Google gobbled up rivals through anticompetitive mergers, the US government said, and intimidated publishers and advertisers into using the company’s proprietary ad-tech products.

As part of the lawsuit, the US government asked that Google be broken up and that the court order the company to spin off at least its online ad exchange and publisher ad server, if not more.

Google, the US government alleged, “has corrupted legitimate competition in the ad-tech industry by engaging in a systematic campaign to seize control of the broad swath of high-tech tools used by publishers, advertisers, and brokers.” , to facilitate digital advertising. Having inserted itself into all aspects of the digital advertising market, Google has used anti-competitive, exclusionary and illegal means to eliminate or severely diminish any threat to its dominance over digital advertising technologies.

The lawsuit was filed in the US District Court for the Eastern District of Virginia.

Tuesday’s lawsuit marks the federal government’s second antitrust complaint against Google since 2020, when the Trump administration sued over Google’s alleged anticompetitive harms in search and search advertising. That case is still ongoing. Google has also been the subject of antitrust litigation by state and private actors.

Google did not immediately respond to a request for comment.

The lawsuit is a frontal attack on Google’s core and massive advertising business. Google generated $209 billion in advertising revenue in 2021, according to its annual report, a figure that represents more than 80% of its total revenue. By comparison, the next biggest giant in online advertising, Facebook parent Meta, generated $115 billion in 2021.

Third-party estimates suggest that Google and Facebook accounted for the majority of US digital ad revenue, peaking around 2017, with Google taking around a third of the market. Since then, however, others, including Amazon, have begun encroaching on that business.

The US complaint echoes concerns that have led to similar antitrust investigations in the UK and the European Union.

Tuesday’s complaint marks an opening salvo against Big Tech by Justice Department antitrust chief Jonathan Kanter. Kanter has spent months laying the groundwork for a broader crackdown on the tech industry’s most dominant companies, reflecting commitments by President Joe Biden and others in the US government to hold powerful companies accountable.

Under Kanter, Justice Department antitrust officials have pushed to bring more cases to trial, as well as prosecute cases involving unconventional legal theories.

In 2020, House lawmakers released a 450-page report that found Google, along with Amazon, Apple and Facebook, have “monopoly power” in key business segments.

The report was the result of a 16-month investigation in which congressional staff reviewed corporate documents and interviewed many technology industry customers and rivals.

It concluded, among other things, that Google was in a unique position to benefit from its powerful role in the online advertising industry.

“With significant shares of the ad exchange market and the ad broker market, and as a leading provider of ad space, Google simultaneously acts on behalf of publishers and advertisers, while also trading for itself,” it says. The report.

The CNN Wire
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