What to know about the DOJ’s lawsuit against Google’s digital ad business

The U.S. Department of Justice (DOJ) filed a second lawsuit against Google this week, underscoring ongoing bipartisan fear among regulators and lawmakers about tech giants.

The Biden administration’s case, joined by a handful of states, seeks to break up Google to untangle what antitrust enforcers say is anticompetitive dominance of the digital advertising market.

Google has denied the allegations, arguing they are similar to those in a separate case led by the state of Texas. The government faces a difficult path amidst the challenges. But it adds to an increasingly bitter court battle facing Google and illustrates how federal and state antitrust enforcers are struggling to move forward with plans to combat the dominance of tech giants.

Below is information about the lawsuit.

What are the Justice Department and the states alleging in the lawsuit?

Problem: Advertisements that users typically see while using the Internet.

The Justice Department and a handful of states have argued that Google used a “simple but effective” tactic to gain power in the digital advertising space. The complaint alleges that Google eliminated ad tech competitors through acquisitions and used its dominant position to “force more publishers and advertisers” to use its products while “undermining their ability to effectively use competing products.”

“It’s a marketplace that involves billions of transactions a day. Basically, every time a user visits a website, there’s an exchange, owned by Google, that connects publishers to advertisers, publishers on servers owned by Google. Ad space is available on Google, and advertisers place their ads on servers that Google also owns,” said Katherine Van Dyke, senior counsel at the American Economic Freedom Project.

“Google has all three, and it has created a system that basically makes going to market almost impossible,” she added.

A key part of the complaint revolves around Google’s 2008 acquisition of ad technology company DoubleClick, which became Google Ad Manager. The lawsuit, aimed at forcing Google to spin off its Ad Manager suite, could deal a major blow to the tech giant’s business.

Part of Google’s defense in the case was to emphasize that the acquisitions had been approved by federal regulators at the time.

“In order to reverse these two acquisitions, the Department of Justice is attempting to rewrite history at the expense of publishers, advertisers and Internet users,” Dan Taylor, Google’s vice president of global advertising, said in a blog post.

How does this lawsuit differ from others facing Google?

Tuesday’s lawsuit is the second brought by the Justice Department, following one filed by the Trump administration in October 2020.

The Justice Department’s first case is targeting Google’s dominance of the search market.

“Google is a big company and it looks like the DOJ is looking into multiple areas [there] Focus on anti-competitive behavior,” Charlotte Slaiman, director of competition policy at Public Knowledge, said Wednesday.

“If you read yesterday’s 150-page complaint, I think it’s clear there’s a lot more to be done, so it makes perfect sense to me. [there] Multiple cases are required,” Slaiman added.

Google also faces a case led by Texas Attorney General Ken Paxton (R) that also targets the company’s dominance of the digital advertising market.

Part of Google’s argument against the new lawsuit is that the case “largely repeats” what the company believes is a “baseless lawsuit” in Texas.

A federal district court dismissed some of the cases involving allegations of dealings between Google and Facebook parent Meta, but largely allowed the case to proceed.

In July, a bipartisan coalition of state attorneys general filed an antitrust lawsuit against Google over its control of the Android app store. The case concerns another area dominated by Google.

Google also disputed the allegations made in the case, arguing that its application system offers “more openness and choice than other systems.”

How is the tech industry responding?

Aside from Google’s wrangling over how regulators approved its previous acquisitions — DoubleClick in 2008 and Ad Meld in 2011 — the tech company said its tools actually helped advertisers bid “more effectively.” , and help publishers “make more money,” according to a fact sheet compiled by Google.

Google’s fact sheet also states that the law does not require “handing over business to a competitor,” which is what Google says, and the DOJ is “trying to force” Google to do so by saying it should bid on rival ad exchanges.

“This statement ignores the fact that we have built our ad technology to interoperate with 80 competing platforms for use by publishers and even more advertisers. Many of the publishers and advertisers who use our services also use competing adversary’s platform,” Google said in the fact sheet.

The company and tech industry groups also cited what they see as the overall economic downturn, recent layoffs and growing competition in digital advertising as reasons to criticize the Justice Department’s decision to file the lawsuit.

Chamber of Progress president and CEO Adam Kovacevich said other companies, including Meta, Apple and Amazon, have begun to capture a larger share of the digital advertising market. The technology group counts Google, Meta, Apple and Amazon among its corporate partners.

“Overall, the online advertising market is just shrinking because of the economy, and a lot of advertisers are pulling back. I think economic realities will largely be in the background as the case unfolds,” Kovacevic told The Hill.

Kovacevich also cited a lawsuit filed after Google laid off 12,000 employees.

Taylor, Google’s vice president of global advertising, also emphasized this argument in his blog post, saying that “antitrust cases should not punish companies that provide popular and efficient services, especially in difficult economic times.”

That claim doesn’t carry much weight, Sleman said.

“I don’t think anyone would say that a company doing a round of layoffs means they’re not subject to antitrust laws,” she said.

What was Congress’ response?

Lawmakers on both sides of the aisle cheered the Justice Department’s decision to sue Google. The move brought together an unlikely group of senators — Democrats Amy Klobuchar (D-Minnesota) and Richard Blumenthal (D-Connecticut) and Republican Ted Cruz (Texas) and Mike Lee (Utah) — They issued a joint statement saying they were “encouraged” by the Justice Department’s “efforts to protect competition in online advertising.”

On the House side, Rep. Jerry Nadler (D-N.Y.), David Cicilline (D-R.I.) and Ken Backer (R-Colo.) applauded the Justice Department’s action.

The bipartisan cheers from Congress could also be a sign that some legislative action is moving forward in this Congress, although hurdles remain between control of the House and Senate.

Lee, Cruz, Klobuchar and Blumenthal said in their statement that they are “committed to a legislative solution that goes beyond one company to ensure that one monopoly is not replaced by another and that all consumers can Benefit from competition and transparency.”

Last year, four senators supported Lee’s bill aimed at increasing competition and transparency in the digital advertising market.

Two other high-profile antitrust bills aimed at tech giants, one aimed at limiting companies’ favoritism of their own products and services and another aimed at increasing competition in the app market, passed the House and Senate with bipartisan support Judiciary Committee, but failed to pass it across the finish line before the end of the year.

Sleman said the Justice Department’s emphasis on the allegations and making them “clear and convincing” “added legitimacy,” which could increase congressional support for the proposals, especially in a country that “has been on the sidelines.” among legislators.

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