AP – One month after a judge declared Google’s search engine an illegal monopoly, the tech giant faces another antitrust lawsuit that threatens to break up the company, this time over its advertising technology.
The United States (US) Justice Department and a coalition of states contend that Google built and maintains a monopoly over the technology that matches online publishers to advertisers.
Dominance over the software on both the buy side and the sell side of the transaction enables Google to keep as much as 36 cents on the dollar when it brokers sales between publishers and advertisers, the government contends in court papers.
Google said the government’s case is based on an internet of yesteryear, when desktop computers ruled and internet users carefully typed precise world wide web addresses into URL fields.
Advertisers now are more likely to turn to social media companies like TikTok or streaming TV services like Peacock to reach audiences.
In recent years, Google Networks, the division of the Mountain View, California-based tech giant that includes such services as AdSense and Google Ad Manager that are at the heart of the case, actually have seen declining revenue, from USD31.7 billion in 2021 to USD31.3 billion in 2023, according to the company’s annual reports. The trial over the alleged ad tech monopoly began yesterday in Alexandria, Virginia.
It initially was going to be a jury trial, but Google manoeuvred to force a bench trial, writing a check to the federal government for more than USD2 million to moot the only claim brought by the government that required a jury.
The case will now be decided by US District Judge Leonie Brinkema, who was appointed to the bench by former President Bill Clinton, though, also has experience with highly technical civil trials, working in a courthouse that sees an outsize number of patent infringement cases.
The Virginia case comes on the heels of a major defeat for Google over its search engine, which generates the majority of the company’s USD307 billion in annual revenue.
A judge in the District of Columbia declared the search engine a monopoly, maintained in part by tens of billions of dollars Google pays each year to companies like Apple to lock in Google as the default search engine presented to consumers when they buy iPhones and other gadgets.
In that case, the judge has not yet imposed any remedies. The government hasn’t offered its proposed sanctions, though there could be close scrutiny over whether Google should be allowed to continue to make exclusivity deals that ensure its search engine is consumers’ default option.
Professor Peter Cohan of management practice at Babson College said the Virginia case could potentially be more harmful to Google because the obvious remedy would be requiring it to sell off parts of its ad tech business that generate billions of dollars in annual revenue.
“Divestitures are definitely a possible remedy for this second case,” Cohan said “It could be potentially more significant than initially meets the eye.”
In the Virginia trial, the government’s witnesses are expected to include executives from newspaper publishers including The New York Times Co and Gannett, and online news sites that the government contends have faced particular harm from Google’s practices.
“Google extracted extraordinary fees at the expense of the website publishers who make the open internet vibrant and valuable,” government lawyers wrote in court papers.
“As publishers generate less money from selling their advertising inventory, publishers are pushed to put more ads on their websites, to put more content behind costly paywalls, or to cease business altogether.”
Google disputes that it charges excessive fees compared to its competitors.
The company also asserts the integration of its technology on the buy side, sell side and in the middle assures ads and web pages load quickly and enhance security.
And it said customers have options to work with outside ad exchanges.
