Following a federal judge in the United States ruling that Alphabet’s subsidiary Google has illegally monopolized internet searches, this tech giant is now facing another antitrust lawsuit that could potentially lead to its breakup. The focus of this lawsuit is Google’s online advertising technology.
On Monday, the case was heard in a court in Virginia, with the U.S. Department of Justice and Google making their arguments to a federal judge. The judge will decide whether Google has monopolized online advertising technology without a jury. The trial is expected to last for several weeks.
Prosecutors claim that Google has significantly dominated the technological infrastructure, providing funding for news and information on websites through over 150,000 online ad sales per second.
Regulators believe that Google has established, acquired, and maintained a monopoly over the matching technology for online publishers and advertisers.
They allege that Google also controls the ad trading market, acting as an intermediary between buyers and sellers.
According to the Associated Press, U.S. Department of Justice lawyer Julia Tarver Wood stated during the trial that Google gained dominance through acquisitions in this field until it could manipulate ad auction rules for its own profit. She said, “A monopoly is bad enough, but what we have now is a triple monopoly.”
Fiona Scott Morton, former chief economist for the DOJ’s antitrust division, pointed out that it is rare for one company to dominate both sides of a market and the exchange. She added that the opacity of this sector’s technology has helped Google establish its position without officials and the public fully understanding what is happening.
Google has denied these allegations, claiming that they are “factually incorrect” and argued before Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia that “success is not illegal.” The company stated that customers choose Google because its services are superior and that Google faces fierce competition.
Google argues that the government’s rationale is based on the past internet landscape, where desktop computers dominated and users entered precise website addresses in the URL bar. Today, advertisers are more inclined to attract audiences through social media companies like TikTok or streaming TV services like “Peacock.”
Google’s lawyer Karen Dunn emphasized the “serious risk of error or unintended consequences” in dealing with rapidly evolving technology and considering whether antitrust laws need to intervene. She also warned that any action taken against Google would not benefit small businesses but instead allow other tech giants like Amazon, Microsoft, and TikTok to fill the void.
If Judge Brinkema rules against Google, she may consider the prosecutors’ request to require Google to divest at least its Google Ad Manager ad management tool, which includes Google’s publisher ad server and ad exchange platform.
Reuters quoted research data from stock analysis firm Wedbush, stating that Google’s advertising technology tools brought in $20 billion in revenue in 2020, equivalent to 11% of the company’s total revenue, and approximately $1 billion in operating profit, accounting for around 2.6%.
The Associated Press quoted Peter Cohan, a management practice professor at Babson College, saying that the Virginia case could inflict greater damage on Google because an obvious remedy would be to demand Google to sell a portion of its advertising technology business that generates annual revenues in the billions of dollars.
Google has lost two antitrust lawsuits within a year. Last month, the Washington D.C. federal court ruled that Google illegally monopolized online search business; and in another case brought by Epic Games last December, a jury in San Francisco found Google’s app store guilty of illegal monopoly.