DOJ’s second antitrust trial of Google begins today

Google is facing trial today in the second of two antitrust cases brought by the federal government, this time with the Department of Justice (DOJ) accusing the tech giant of illegally maintaining a monopoly on digital advertising technology.

“Google used anticompetitive, exclusionary, and unlawful means to eliminate or materially reduce any threat to its dominance of digital advertising technologies,” the DOJ alleges in the civil lawsuit, joined by eight states. It seeks to force Google to divest part of its ad technology stack, a suite of products that helps broker ad sales between website publishers and digital advertisers.

Google says the government is making a mistake that will hurt not only Google but also website publishers and digital advertisers. “Ad buyers and sellers have a huge range of choices among ad technology providers, and they exercise those choices every day,” Lee-Anne Mulholland, Google’s vice president of regulatory affairs, wrote in a Sept. 8 blog post. “The average advertiser uses three platforms to buy ads — and can choose from hundreds of options. And the average large publisher uses six platforms to sell ads — and can choose from more than 80 options.”

Regulatory revision and hidden dangers

The case will be heard by a district judge, not a jury, and will be decided by District Judge Leonie Brinkema.

The Justice Department alleges that Google illegally maintained a dominant position in the digital ad technology market, in part by acquiring competitors.

The acquisitions in question — something called AdMeld and something called DoubleClick — happened 13 and 16 years ago, respectively, and were approved by U.S. regulators at the time.

Such acquisitions are not uncommon. Technology companies routinely buy smaller companies that have developed innovative or valuable technologies.

But reconsidering acquisitions that were deemed good when they happened has been a theme of President Joe Biden’s antitrust agenda, part of a broader administration hostility to companies it deems too big.

It also creates a completely confusing situation for American companies, which can — as Google did in this case — get approval to acquire a product, spend more than a decade developing it and building business systems and services around it, only to find out they may have to abandon it.

The potential for abuse and government overreach in such a system is significant. After all, if nothing was wrong when the takeover occurred, what could retroactively make it illegal? The answer certainly seems to be that the company has fallen out of political favor.

If allowed to do so, any takeover becomes precarious because the federal government could decide more than a decade later that your behavior, which it previously approved, was in fact illegal. And fewer takeovers could mean less innovation and fewer economies of scale, meaning that it is consumers who ultimately lose out.

It also seems like a weapon the government can use to force tech companies to do what it wants. Take advantage of our “suggestions” on content moderation, who to block from your services, etc. – we wouldn’t want to have to go back to what you bought decades ago…

Much of the Justice Department’s case seems similarly flawed. For example, it accuses Google of having monopoly while its share of the digital ad market is only about a quarter — and that share is shrinking, just like Google’s ad revenue.

“In recent years, Google Networks, the division of the Mountain View, Calif.-based tech giant that includes services like AdSense and Google Ad Manager at the center of the case, has actually seen revenue decline,” ABC notes. According to Google’s annual reports, revenue fell from $31.7 billion in 2021 to $31.3 billion last year.

Google faces growing competition for ad spending from social media platforms like TikTok and a growing range of streaming platforms. But the Justice Department has conveniently defined the relevant market to exclude such competitors.

The ongoing crusade

The Justice Department’s first antitrust case against Google, filed in 2020, concerned the company’s practice of preloading Google search engines on Android phones and striking deals with other companies, such as Apple, to set Google as the default search engine. The case went to trial last fall and was decided last month.

In a somewhat absurd ruling, the court acknowledged that Google had launched the “best” search engine and achieved dominance in the search engine and search advertising markets by being better. But because “Google’s distribution agreements are exclusive and have anticompetitive effects,” the court ruled that it had violated the Sherman Antitrust Act of 1890.

The decision underscored the strange (and some might say capricious) nature of federal antitrust law, which can make the same conduct legal or illegal depending on a company’s size and market position. A search firm striking deals with larger tech players to secure a spot isn’t actually prohibited. It can even be a smart business move for a small or midsize company. But when a large company with a dominant market position does it, that smart business move can become an antitrust violation.

It also shows how antitrust law can be unfair to parties outside the company that is accused of violating it. Presumably, Apple and other companies would not make Google their default search engine if they believed it was harmful to their users. Now they can no longer receive incentives from Google to make it their default, so they can instead choose something that basically everyone would consider an inferior product (such as Bing), or they can continue to make Google their default search engine without receiving compensation for it.

Apple and others lose out, and if a setting other than Google is chosen, consumers lose out too—they have to use an inferior product or change their own default search engine. Changing the default search engine on your phone or computer is no big deal. But it becomes even more irritating when the government forces people to take on this minor inconvenience in the name of “helping” ensure a fair market.

More Sex and Technology News

• “The Florida Department of State is investigating thousands of petition signatures that were used to put an abortion amendment on the November ballot,” the statement said. Tampa Bay Times reports. The state says it is taking care to ensure the signatures are not fake, but supporters of the amendment say it is “political interference.” Two county supervisors “told the Times on Wednesday that the state’s investigations were highly unusual,” the newspaper reported.

• It’s that time of year again when police give funny names like “Operation Pumpkin Spice” to their efforts to handcuff people who have attempted to have consensual sex with another adult.

• A federal appeals court has blocked part of a California law that would have required social media companies to disclose some of their content moderation policies.

Today’s picture