A second antitrust trial between Google and the U.S. Justice Department began on Sept. 9, with a federal judge in Virginia hearing opening arguments on whether the tech giant illegally monopolized the digital advertising industry. The case could have far-reaching implications for Google’s main source of revenue, as well as for the tech industry and online publishers.
The long-awaited trial is the second major U.S. antitrust trial against Google, after the company lost a landmark case last month that found the company illegally monopolized the online search industry. Unlike that trial, the Justice Department is seeking specific remedies in its second case, which would force Google to break up parts of its business and divest some of its advertising technology.
The Justice Department’s second lawsuit, submitted in January 2023Google focuses on Google’s acquisition and application of digital advertising technology. Website publishers looking to make money from advertising rely on this technology to act as a sort of middleman. Google’s services allow sites to sell ads on their pages and advertisers to buy ad space that reaches potential customers, with Google taking a sizable cut of both parties’ advertising dollars.
“Google’s monopolies in each of these separate markets were not an accident, but rather the result of a campaign to condition, control, and tax digital advertising transactions over 15 years,” the Justice Department said in a pretrial filing. “This campaign was exclusionary, anticompetitive, and mutually reinforcing.”
The Justice Department highlighted several Google acquisitions to argue that the company now dominates every facet of digital advertising. Google Bought the advertising technology company In 2007, Google acquired DoubleClick for $3.1 billion, providing the tech giant with an online marketplace for publishers looking to sell advertising space. The Justice Department alleges that DoubleClick now controls more than half of the advertising market for display transactions on the open web. Over the next few years, Google acquired two other companies, Invite Media and AdMeld, which gave it access to advertisers looking to buy advertising space and the ability to connect them with publishers. These deals resulted in Google controlling both the supply and demand for online advertising, as well as the exchange point where those parties meet, the Justice Department alleges.
In her opening statement, Justice Department attorney Julia Tarver Wood claimed that Google had created a “triple monopoly” through its acquisitions. Google attorney Karen Dunn, meanwhile, framed the government’s argument as lacking a clear understanding of how the Internet works and claimed that Google was just one company among a number of serious competitors.
While there is nothing illegal about the overall model of matching websites and advertisers with targeted consumers, the Justice Department alleges that Google has created a monopoly through a series of ruthless anticompetitive moves, including eliminating rivals through acquisitions or exclusionary practices that amount to exercising an illegal monopoly over the industry, according to the complaint.
“An industry giant, Google, has corrupted legitimate competition in the advertising technology industry by engaging in a systematic campaign to seize control of the broad swath of high-tech tools used by publishers, advertisers, and brokers to facilitate digital advertising,” the Justice Department wrote in its complaint.
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A Google advertising executive who is cited in the government complaint He compared the company’s business model to that of Goldman Sachs or Citibank, owners of the New York Stock Exchange.
The lawsuit alleges that Google uses its dominant position to deliberately overcharge advertisers while pocketing at least 30 cents of every dollar that reaches website publishers through its advertising technology. That windfall has seen the company earn tens of billions of dollars each year from its advertising technology, which makes up the majority of its total revenue.
“The harm is clear: website creators earn less and advertisers pay more than they would in a market where unchecked competitive pressure could discipline prices and give rise to more innovative advertising technology tools,” the complaint says, adding that it forces publishers to pass costs on to consumers through paywalls and subscriptions. It cites one of Google’s own employees who allegedly called the company’s position that of an “authoritarian middleman.”
Federal prosecutors are expected to introduce internal Google documents and witness testimony to support their argument. Executives from publishers including Disney, The New York Times, BuzzFeed, Vox and NewsCorp are listed as potential witnesses to testify against Google. Founders and CEOs of advertising technology companies, as well as advertisers, are also expected to testify. Prosecutors will also subpoena a long list of current and former Google employees.
Google’s defense in pretrial filings has been to argue that refusing to deal with rival companies is not an antitrust violation and that the Justice Department is misdefining the digital advertising market. The company issued a statement in early June calling the lawsuit a “baseless attempt to pick winners and losers in a highly competitive industry.”
Although the trial was originally scheduled to be held before a jury, Google managed to avoid that outcome by Paying the government more than 2 million dollars to resolve claims that its advertising technology overcharged federal agencies. Claims for monetary damages typically result in jury trials, while judges decide non-monetary claims directly in antitrust cases.
The case is being presided over by Judge Leonie Brinkema, 80, a Bill Clinton appointee who previously oversaw the controversial trial of one of the 9/11 plotters. Brinkema made headlines in that case when she paraphrased T.S. Eliot after the guilty verdict, telling the defendant he would “die with a whimper.”
Google lost its previous antitrust case, which focused on its dominance over the online search industry, after a federal judge ruled in August that it had created an illegal monopoly through multibillion-dollar exclusionary contracts. The company is in the process of appealing that decision and it is unclear what penalties it could face.