Following Google’s recognition as a monopoly in online search, the company is facing a new lawsuit. The US Department of Justice (DOJ) and Google are preparing for a new round of confrontation. This time, the subject of the dispute will be the online advertising market. According to TheVerge, the DOJ accuses Google of monopolizing the advertising technology market and using its dominant position to suppress competition.
This lawsuit follows the DOJ’s recent victory in a case involving monopolization of the online search market, in which a federal judge in Washington found Google guilty. The new case will be heard by a different judge in Virginia, USA. “It’s like a double whammy,” says Rebecca Haw Allensworth, a professor of antitrust law at Vanderbilt Law School. “Google is probably still licking its wounds from its previous defeat, and losing this case would be a serious blow to the company.”
The DOJ’s Allegations and Google’s Response
The DOJ alleges that Google illegally monopolized the advertising market by controlling both demand (from advertisers) and supply (from website owners), as well as the exchanges that connect the two. The government alleges that Google engaged in a 15-year “campaign to set the terms, control, and tax digital advertising transactions” by illegally bundling its inventory and preventing fair competition.
The lawsuit alleges that Google used its dominant position in the search market to create demand from advertisers. Then, by purchasing DoubleClick, a platform for placing ads on websites, in 2009, the company gained access to a huge pool of publishers willing to connect their sites with advertisers through DoubleClick’s ad network. With all sides of the market under its control, the DOJ alleges that Google began taking actions to strengthen its monopoly, including manipulating ad auctions and setting unequal terms for access to its inventory.
Google, for its part, says the government is trying to punish the company for creating valuable tools that make publishers and advertisers more efficient. Google argues that the government’s position does not reflect the reality of the market and ignores the fierce competition the company faces and the innovations that make its tools attractive to users.
Potential Implications and Legal Strategy
Interestingly, the case will be heard by a judge without a jury. A jury trial was originally planned, but Google paid the government $2.3 million, which the company says is the “maximum damages” the government was seeking. This was done to avoid a jury trial, which, as Google’s recent experience in losing a case against Epic Games showed, can be unpredictable.
One of the key questions in this case will be whether the government will try to force Google to cooperate with its competitors. According to Allensworth, the DOJ will try to avoid asking that question, and instead will seek to highlight the illegal manipulations that Google engaged in and the short-term sacrifices the company made to cement its dominance.
The DOJ claims that Open Bidding effectively helped them charge more fees and “disconnected competing ad exchanges from their own publisher customers.”
For advertisers and site publishers who rely on Google’s tools, a ruling against the company could mean dramatic changes to their online businesses, notes NIX Solutions. According to Evelyn Mitchell-Wolf, a senior analyst at Emarketer who covers the US digital advertising market, the split of Google’s advertising business could cause a lot of problems, as market participants will have to urgently find alternative solutions. However, the government hopes that in the long term, such moves will revive competition in the industry. At the same time, Mitchell-Wolf said, some advertisers and publishers will be relieved to be able to reduce their dependence on Google.
We’ll keep you updated on the developments of this case as it progresses through the legal system.