WASHINGTON, Jan 24 (Reuters) – The US Justice Department sued Alphabet Google (GOOGL.O) on Tuesday, accusing the company of abusing its dominance of the digital advertising business and asking it to sell its Ads Manager suite. must be forced to. The government’s latest jab at thwarting Big Tech’s market power.
The lawsuit pertains to a business of Google’s that accounts for 80% of its revenue. The Justice Department asked the court to force Google to divest a significant portion of its advertising technology business.
The antitrust complaint states, “Google has used anticompetitive, exclusive and illegal means to eliminate or severely reduce any threat to its dominance over digital advertising technologies.”
Google said the government was “doubling down on a flawed logic that will slow innovation, raise advertising fees, and make growth harder for thousands of small businesses and publishers.”
The federal government has said it is trying to level the playing field for rivals from Big Tech companies including Amazon.com (AMZN.O), Facebook owner Meta Platforms (META.O) and Apple Inc (AAPL.O). Still working.
Tuesday’s lawsuit by the administration of President Joe Biden, a Democrat, follows a 2020 antitrust lawsuit brought against Google during the term of Donald Trump, a Republican.
The 2020 lawsuit alleges antitrust law violations in how the company gained or maintained its dominance with its monopoly in online search and is set to go to trial in September.
eight states in litigation
Eight states joined Tuesday’s lawsuit, including Google’s home state of California.
California state attorney general Rob Bonta said Google’s practices “suppressed creativity in a space where innovation is critical.”
Colorado Attorney General Phil Weiser said that Google’s dominance had offered higher fees for advertisers and less money for publishers with ad space. “We are taking action by filing this lawsuit to end Google’s monopoly and restore competition in the digital advertising business,” they said in a statement.
Google shares fell 1.9 percent on Tuesday.
In addition to its famous search, which is free, Google generates revenue through its interlocking advertising technology businesses. The government asked for disinvestment of the Google Ads Manager suite, including Google’s ad exchange, AdX.
Google Ads Manager is a suite of tools, including a tool that allows websites to offer advertising space for sale and an exchange that serves a marketplace that automatically matches advertisers with those publishers. Has an account.
Advertisers and website publishers have complained that Google is not transparent about where advertising dollars go, specifically how much goes to publishers and how much to Google.
Tuesday’s lawsuit raises concerns about some products in the ad tech stack, where publishers and advertisers buy and sell ad space. That business was worth about $31.7 billion in 2021, or 12.3 percent of Google’s total revenue. About 70% of that revenue goes to the publishers.
The company made a series of purchases, including DoubleClick in 2008 and AdMob in 2009, to help make it a major player in online advertising.
According to Insider Intelligence, while Google remains the longtime market leader, its share of US digital advertising revenue has dropped from 36.7% in 2016 to 28.8% last year.
The Justice Department sought a jury to decide the case, which was filed in the US District Court for the Eastern District of Virginia.
The lawsuit chronicles Google’s multiple attempts to dominate the advertising market, with the government arguing that the company has the “technological tools to eliminate the threat” of competitors.
The complaint discussed header bidding, which was a way that companies could bypass Google to bid for advertising space on websites.
This spawned a series of projects including “Project Poirot”, named after Agatha Christie’s master detective, Hercule Poirot. The project was designed to “effectively identify and respond to ad exchanges that had adopted header bidding technology.”
The 149-page complaint said Google doubled down after the initial success of Project Poirot in manipulating its advertisers’ spending to reduce competition from rival ad exchanges. Rival AppNexus/Xandr would lose 31% of DV360 advertiser spending, Rubicon would lose 22%, OpenX would lose 42%, and PubMatic would lose 26%, the complaint said.
Reporting by Diane Bartz and David Shepperson; Additional reporting by Sheila Dang; Editing by Chris Sanders and Grant McCool
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