The U.S. government is targeting the core of Google’s vast wealth—its highly profitable ad tech business.
A trial starting on Monday will examine the Department of Justice’s (DoJ) claims that Google’s parent company, Alphabet, illegally operates a monopoly in this market.
Last year, Alphabet generated more than $200 billion (£152 billion) through placing and selling ads viewed by internet users.
While Alphabet asserts that its success is due to the “effectiveness” of its services, prosecutors argue that the company has exploited its market dominance to suppress competitors.
“This is a really important industry that draws billions of consumer dollars annually,” noted Laura Phillips-Sawyer, a professor at the University of Georgia School of Law. “All consumers have an interest in this litigation.”
This is the second significant antitrust case the tech giant has faced in the U.S. In August, a judge ruled that Google’s dominance in search was illegal, though the penalties Google and Alphabet will face remain uncertain.
The DoJ, along with a coalition of states, filed a lawsuit in 2023 accusing Google of dominating the digital ad marketplace and using its power to stifle competition and innovation.
Google, however, insists that it is one of many companies that enable digital ad placement.
It argues that competition in the digital ad sector is expanding, pointing to the ad growth and increased revenues of companies like Apple, Amazon, and TikTok.
In response to the DoJ lawsuit, Google stated in a 2023 blog post that competition is flourishing.
At a press conference in January 2023, U.S. Attorney General Merrick Garland said Google’s actions had “halted the rise of rival technologies.”
Both sides will present their arguments to U.S. District Judge Leonie Brinkema, who will issue the verdict.
This trial follows a landmark ruling last month in a separate monopoly case against Google.
Judge Amit Mehta found that Google acted illegally to quash competition in its online search business, declaring, “Google is a monopolist, and it has acted as one to maintain its monopoly.”
In last year’s search case, Google defended its dominance by arguing that it provided a superior product.
The company appears to be employing a similar strategy in the ad tech case. When asked for comment, Google directed to its 2023 blog post, where it emphasized that “no-one is forced to use our advertising technologies—they choose to use them because they’re effective.”
Judge Mehta held a status conference on Friday, marking the beginning of the process to determine remedies for Google’s behavior.
Dan Ives, managing director at Wedbush Securities, said the DoJ’s recent victory could give it momentum, though he expects the outcome to involve “business model tweaks, not a breakup” of the company.
However, in Judge Brinkema’s courtroom, the intricacies of advertising technology could present challenges for the government’s case.
“We all use search, and we intuitively understand that product,” said Rebecca Haw Allensworth, an antitrust professor at Vanderbilt University Law School.
By contrast, advertising technology is “so complex that I think that’s going to be a real challenge for the government to make a clear, simple monopolization argument here.”
The U.S. is not the only country scrutinizing Google’s ad tech practices. Last Friday, the UK’s Competition and Markets Authority (CMA) reported that Google appeared to be abusing its dominance in the ad tech industry, based on the initial findings of its investigation.
The CMA’s inquiry found that Google employed anti-competitive practices to maintain its control over the online advertising technology market, which could be harming thousands of UK publishers and advertisers.
A representative for Google countered, arguing that the CMA’s decision was based on a “flawed” understanding of the ad tech industry.
