On January 25, 2023, a pedestrian passed by the Google office in New York City.
Leonardo Muñoz | View News | Getty Images
A month after losing a landmark antitrust case brought by the Justice Department, Google will return to court for a second confrontation with federal prosecutors.
In August, a judge ruled that Google had a monopoly in online searches, the largest antitrust ruling in the technology industry since the Google case. Microsoft More than 20 years ago. This time, Google is defending itself against accusations that its ad monopoly has led to higher ad prices for clients.
The trial begins Monday in Alexandria, Virginia, and is likely to last at least several weeks. This is the first technology antitrust trial in a case brought by the Biden administration. The department’s earlier lawsuit was first filed in October 2020, when Donald Trump was still in the White House.
While U.S. officials have been pursuing big tech companies over the past few years, only Google has so far ended up in federal court. The U.S. Department of Justice sued Apple in March, saying its iPhone ecosystem was a monopoly that led to its “astronomical valuations” to the detriment of consumers, developers and rival phone manufacturers.
At the end of 2020, the U.S. Federal Trade Commission filed an antitrust lawsuit against Facebook (now Facebook) Yuan), claiming that the company established a monopoly through its acquisitions of Instagram and WhatsApp. Earlier this year, Yuan ask The court dismissed the lawsuit. In 2023, the FTC and 17 states filed lawsuits Amazon It is suspected of using its “monopoly power” to raise prices, reduce shopper quality and illegally exclude competitors and undermine competition.
For Google, the focus turns to its advertising tools, part of the company’s $200 billion digital advertising business.
The government alleged that Google violated Sections 1 and 2 of the Sherman Act, which prohibit anticompetitive conduct. The Justice Department will argue that Google locks its products into the hands of publishers and advertisers and that sites must develop workarounds to deal with it. Several states joined the case, including California, Colorado, Connecticut, New Jersey, New York, Rhode Island and Tennessee.
Google’s ad business has drawn much criticism over the years because the platform operates on multiple sides of the market — buying, selling and ad trading — giving the company unique insights and potential influence. In the original lawsuit, the Justice Department cited internal communications from a Google Ads executive who said owning many aspects of the ad sales process would be like “if Goldman Sachs or Citibank owned the New York Stock Exchange,” referring to the New York Stock Exchange stock exchange.
The key is how Google is allowed to operate its advertising portfolio. If successful, the Justice Department will seek to divest at least the Google Ad Manager suite (GAM), a marketplace that enables brands to create and manage ad units, track ad campaigns, and allows publishers to sell ad inventory.
This is different from Google’s flagship platform, Google Ads, which is aimed at businesses looking to promote their products or services on search, websites, YouTube and other partner sites.
In the most recent quarter, Google parent Alphabet reported $64.6 billion in advertising revenue, accounting for more than three-quarters of total sales. Of that, $48.5 billion came from search and other businesses like Gmail and Maps, and $8.7 billion came from YouTube.
The GAM suite is part of the Google Network business, which generated $7.4 billion in revenue in the second quarter, accounting for about 11% of total ad sales.
In addition to a possible partial dissolution, if the Justice Department prevails, Google could face a barrage of lawsuits from advertisers seeking monetary awards. Bernstein analysts said Google could face losses of up to $100 billion in such lawsuits.
In the first antitrust case, the court found that Google violated Section 2 of the Sherman Act, which prohibits monopolies. U.S. District Court Judge Amit Mehta for the District of Columbia agreed with the Justice Department that Google maintains its share of the general search market by creating strong barriers to entry and a feedback loop that maintains its dominance.
“Google is a monopoly and it has always defended its monopoly,” Mehta wrote.
Google is now awaiting penalties in the case. The Justice Department requested an extension until February to provide remedies, followed by a hearing in April. Google said the Justice Department should have done its homework and be ready to make a proposal in October.
What will the two sides argue?
In the second case, the Justice Department plan shows that Google has amassed unparalleled power through its 2008 acquisition of companies such as DoubleClick and by building services that let ad buyers target users online.
The Justice Department said the company’s acquisition strategy “laid the foundation for Google’s later exclusionary behavior in the ad technology industry.” The agency claims that Google controls 91% of the ad server market, the space publishers use to sell ads, and uses its power to unfairly raise ad prices.
The U.S. Department of Justice plans to subpoena YouTube CEO Neal Mohan to testify. Mohan served as Vice President of DoubleClick prior to the acquisition. When incorporated into Google’s ad technology stack, DoubleClick’s technology allows Google in some cases to require publishers to use all of its tools to access any of them, meaning they can’t use rival services for some online ads. . The purchasing process, the agency said.
“Website creators earn less and advertisers pay more than would be the case in a market in which unfettered competitive pressures could limit prices and create higher costs,” the Justice Department said. Multiple innovative advertising technology tools ultimately bring higher quality and lower cost transactions to market participants.
The government said some publishers have been forced to turn to alternative models such as subscriptions to fund their operations, while others have gone out of business.
Google has long pushed back against claims that it dominates online advertising, pointing to the market share of rivals including Meta. It will argue that buyers and sellers have many options, especially as the online advertising market grows.
Google will also argue that the Justice Department’s pursuit will slow innovation, raise advertising costs and make it harder for thousands of small businesses and publishers to thrive.
The company said its advertising tools adapt to the billions of ad auctions that occur online every day, and the Justice Department does not have an accurate picture of ad space. Google will also tell the court that it always offers competitive prices to customers who often mix and match ad platforms.
As it relates to the deal, Google will argue that DoubleClick and AdMeld were not killer acquisitions at the time and that regulators approved the acquisitions.
To make its case, the Justice Department listed potential testimony from Jerry Dischler, a former vice president of Google’s advertising platform who now oversees the company’s cloud applications. It also noted the possibility of visiting several Google product managers.
Also on the DOJ’s list are Sissie Hsiao, a Google artificial intelligence executive who served as global advertising director for display, video and mobile apps, and Scott Sheffer, who is listed as a Google collaborator. Vice President of Partnerships. The government plans to include evidence of Google’s internal communications, testimony from publishers, advertisers and companies trying to compete with Google, as well as experts and professors from Stanford and Harvard universities, the documents show.
Google also noted that it may hire Google Assistant Director of Engineering Nitish Korula, who served as a senior technical advisor to search chief Prabhakar Raghavan. It also requested testimony from Meta Vice President Simon Whitcombe and recommended that senior executives at BuzzFeed and The New York Times provide testimony.
Although the Justice Department and Google have submitted lists of senior executives who may testify or testify, those individuals will not necessarily be subpoenaed.
Google declined to comment for this article.
About The Author
