Google Faces Another Antitrust Battle: Advertising Technology at the Center

A month after a judge ruled Google’s search engine an illegal monopoly, the tech giant now faces another antitrust lawsuit, this time targeting its dominance in advertising technology. The lawsuit, led by the U.S. Department of Justice and a coalition of states, accuses Google of maintaining a monopoly over the technology that links online publishers with advertisers.

Government’s Claims: Monopolizing the Ad Tech Market

The Justice Department argues that Google’s control over the software used for both the buy and sell sides of ad transactions has allowed it to take up to 36% of each dollar spent in ad deals. According to court documents, this dominance has given Google an unfair advantage, harming competition and stifling other market players.

Google’s ad tech system, including tools like AdSense and Google Ad Manager, is central to the government’s case. These platforms allow Google to control vast portions of online advertising, leaving little room for smaller players.

Google’s Defense: The Market Has Changed

Google disputes the government’s case, arguing that it is based on an outdated view of the internet. The company claims that the rise of mobile apps and social media platforms like TikTok has shifted advertisers away from traditional web-based advertising.

The company also points out that its ad tech revenues have declined. The AdSense and Google Ad Manager division generated $31.3 billion in 2023, a decrease from $31.7 billion in 2021.

The Trial: A Bench, Not Jury, Decision

The trial, which began in Alexandria, Virginia, marks the second major antitrust battle Google has faced recently. Initially, it was set to be a jury trial, but Google managed to secure a bench trial by resolving one of the claims that required a jury. The case will now be decided by U.S. District Judge Leonie Brinkema, who has extensive experience with complex technical trials, underscoring the importance of her role in the proceedings.

This trial comes on the heels of another defeat for Google. A Washington D.C. judge recently declared Google’s search engine a monopoly, which could have significant implications for the company’s future. Remedies for that case have yet to be determined. The government has not proposed sanctions, but there is growing speculation about whether Google’s exclusivity deals that make it the default search engine on platforms like Apple could be affected.

Potential Outcomes: Breakup or Divestiture?

Peter Cohan, a management professor at Babson College, believes the ad tech case could lead to more drastic consequences than the search engine ruling. He notes that one potential remedy could be the forced sale of parts of Google’s advertising technology business, which generates billions annually. This possibility underscores the gravity of Google’s situation.

“Divestitures are a possible remedy for this second case,” said Cohan. “It could be potentially more significant than initially meets the eye.”

Publishers Weigh In

Executives from leading newspaper publishers like The New York Times and Gannett are expected to testify in the trial. The government argues that Google’s practices have particularly harmed online publishers by extracting hefty fees, forcing many to place more ads, implement paywalls, or shut down their businesses altogether.

In its defense, Google claims its fees are competitive, and its technology integration ensures fast loading times and enhanced security. The company also argues that publishers can use other ad exchanges if they wish.

Looking Ahead

The trial is expected to last several weeks, with both sides presenting their cases in a traditional courtroom that limits the use of technology. With significant implications for Google’s future, the decision could lead to substantial changes in the company’s operations and market position. It could also reshape the online advertising industry and set a precedent for how tech monopolies are handled in the digital age.

As the case unfolds, the tech giant will continue to defend its practices, claiming the government’s focus on older forms of advertising misses the bigger picture of a rapidly evolving digital landscape.