Google faces new antitrust lawsuit over alleged ad tech monopoly

Google is now facing another antitrust lawsuit, this time over advertising technology, just a month after a judge ruled that its search engine is an illegal monopoly. The U.S. Justice Department and a coalition of states have filed a lawsuit accusing Google of monopolizing technology used to connect online publishers with advertisers.

According to the lawsuit, Google controls both sides of the transaction—the buyer and the seller—which allows it to charge up to 36 cents for every dollar spent on these exchanges. The government claims this dominance harms competition and hurts publishers, who are left with less revenue, forcing them to deploy more ads, put up paywalls, or even shut down.

Antitrust lawsuit targeting Google’s ad tech operations

The trial, which began in Alexandria, Virginia, is expected to last several weeks. The Justice Department’s lawsuit focuses on Google’s ad technology business, particularly its AdSense and Google Ad Manager products, which the government says have given the company an unfair advantage in the online advertising market. Google’s control over these tools allows it to keep a significant portion of the revenue from advertising transactions, the government argues.

The lawsuit also points to a decline in revenue for Google Networks, which owns the services, in recent years — from $31.7 billion in 2021 to $31.3 billion in 2023. But that decline did not affect the government’s argument that Google’s practices restrict competition and harm publishers.

Google cites market changes

Google, in its defense, says the lawsuit relies on outdated views of the internet, where desktop computers were the primary means of access. The company says the advertising landscape has changed significantly in recent years, with advertisers increasingly turning to social media platforms like TikTok and streaming services like Peacock to reach their target audiences.

Google said the government’s focus on display and banner ads displayed on desktop browsers misses a broader shift toward mobile apps and social media, which have become a dominant part of online advertising.

In the company’s pre-trial filings, Google’s lawyers argued that consumer attention has shifted from traditional websites to social media, videos and apps, making the government’s case less compelling. They said the last time users spent more time accessing websites through desktop browsers than on other platforms was in 2012.

Google also says integrating buyer and seller technologies into the advertising process provides faster ad load times and improved security, and customers still have the option to work with other ad exchanges.

The government claims that Google’s practices harm publishers.

But the Justice Department says Google’s control over both sides of the ad tech market leaves little room for competition, allowing the company to charge exorbitant fees.

The government’s witnesses in the trial are expected to include executives from major publishing companies like The New York Times Co. and Gannett, who are expected to testify about the harm they say Google’s practices have done to the industry. The government says publishers, faced with reduced advertising revenue, are being forced to find other ways to stay profitable, such as increasing the number of ads on their websites, moving content behind paywalls or shutting down altogether.

The lawsuit comes on the heels of a significant legal defeat for Google over its search engine, in which a Washington judge ruled that Google maintained its search engine monopoly in part by paying companies like Apple billions of dollars to ensure that Google remained the default search engine on devices like iPhones.

While a judge has not yet ruled on any remedies in the case and the government has not proposed sanctions, there is speculation about whether Google will be allowed to continue to enter into exclusivity agreements that establish its search engine as the default option for consumers.

What is at stake for Google in this process?

Some experts believe the current ad tech case could pose an even bigger threat to Google than the search ruling. Peter Cohan, a professor of management at Babson College, suggests that a potential solution to the case could be forcing Google to sell off part of its ad tech business, which generates billions of dollars in revenue annually. Cohan noted that such divestitures could have a significant impact on the company because the solution could go beyond what is immediately obvious.

Google disputes the notion that it charges excessive fees, saying its fees are in line with those of its competitors and that its platform offers a streamlined process that benefits both advertisers and publishers. But the government continues to focus on what it describes as Google’s extraordinary fees, which it says come at the expense of website publishers who help make the open internet vibrant and valuable.

The trial, which is being held in a courthouse known for its traditional proceedings, includes restrictions on the use of technology, frustrating both lawyers and reporters. Cellphones, for example, are banned from the courthouse, unlike the trial in the District of Columbia, where reporters tweeted updates from the courtroom.

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Featured image courtesy of TOBIAS SCHWARZ/AFP via Getty Images

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