U.S. accuses Google of abusing ad tech monopoly

It is the fifth antitrust lawsuit against Google by U.S. officials since 2020, as lawmakers and regulators around the world try to rein in the influence big tech companies wield over online information and commerce. In Europe, Amazon, Google, Apple and others face antitrust investigations and charges, while regulators have passed new laws to limit social media harms and practices such as data collection.

In the US, Google faces particular scrutiny. In 2020, a group of states led by Texas filed an antitrust lawsuit against it involving ad technology, while the Justice Department and another group of states separately sued Google, accusing it of abusing its dominance in online search. In 2021, several states also sued the company over its app store practices.

William Kovacic, former chairman of the FTC, said the new lawsuit “adds another important complication to Google’s efforts to deal with regulators around the world.” “It is possible to pass one or more of these challenges and reach the goal.”

Google spokesman Peter Schottenfels said the lawsuit “attempts to pick winners and losers in the competitive ad tech space.” It echoes a “baseless” lawsuit brought by the state of Texas in 2020, he said, adding that the Justice Department’s latest lawsuit makes a flawed argument that slows innovation and hurts publishers.

Attorney General Merrick Garland said monopolies “threaten the free and fair markets on which our economy depends.” He added: “We will aggressively protect consumers, preserve competition and work to ensure economic fairness and opportunity for all.”

The Biden administration is trying to use unusual legal theory to sever the wings of some of America’s largest corporations. The FTC recently asked a judge to block Meta’s acquisition of a virtual reality startup, a rare case arguing that a deal could hurt potential competition in an emerging market. The agency also cast doubt on Microsoft’s $69 billion acquisition of video game publisher Activision Blizzard, a notable move because the two companies are not primarily seen as direct competitors.

Those efforts are expected to face strong resistance in federal court. For decades, judges have subscribed to the idea that violations of antitrust laws depend largely on whether they raise prices for consumers. But Jonathan Kanter, head of the Justice Department’s antitrust division, and Lina Khan, chair of the Federal Trade Commission (FTC), said they were willing to lose to allow them to stretch the boundaries of the law and put corporate America in the spotlight. case.

Tuesday’s lawsuit describes Google’s campaign to monopolize ad technology and then abuse that dominance to the detriment of publishers, advertisers and, ultimately, consumers.

The Justice Department and states including New York and California say Google has built a monopoly by buying a key tool for delivering ads to publishers. The result, they say, is that advertisers pay more for space on the Internet, while publishers earn less for Google’s cut.

“Each time a threat emerged, Google used its market power in one or more ad technology tools to neutralize the threat,” the lawsuit said. “Results: Google’s plan for enduring industry-wide dominance has succeeded.”

The new lawsuit echoes claims in a 2020 Google ad tech lawsuit backed by Texas and 14 other states and territories. The lawsuit had mixed reactions in court. In September, a federal judge in New York ruled that parts of the case could proceed but dismissed a charge involving a deal between Google and Facebook that states said was anticompetitive.

Google’s search engine has long been its profit center, but its ad tech unit has helped cement its status as a one-stop shop for advertisers. Together, the two businesses give the company a powerful advantage in setting prices for online advertising. With Google’s various advertising tools and platforms tightly integrated, a forced divestment could be a painful and difficult process for the company.

Alphabet, Google’s parent company, is scheduled to report fourth-quarter financial results on February 2. 2. The online advertising market is sluggish.

Google has been adding to its online advertising tools over the years. It bought advertising tools maker DoubleClick in 2007 for $3.1 billion, expanding the reach of its already powerful digital advertising machine. DoubleClick gave Google a big presence on the internet, providing a marketplace for publishers and allowing Google to host more ads on sites across the web.

At the time, Google’s annual revenue was $16.6 billion, mostly from its search engine business. The company’s ad tech unit will generate $31.7 billion in revenue by 2021, making it the second-largest business unit behind its flagship search engine. Through the first three quarters of 2022, the unit has sales of $24.3 billion.

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