DOJ, 8 States Seek Divestiture of Google's Ad Platform in Antitrust Suit

DOJ and eight states want Google to divest its digital advertising platform, including its DFP ad server and AdX ad exchange, to “cure any anticompetitive harm,” said a Tuesday antitrust complaint (docket 1:23-cv-108) in U.S. District Court for Eastern Virginia in Alexandria.

Google acted with intent to “monopolize, and to destroy effective competition in,” the U.S. ad exchange market, and unless it's restrained, there's “dangerous probability” Google will succeed in monopolizing the ad exchange market in violation of the Sherman Act, alleged the complaint brought by California, Colorado, Connecticut, Rhode Island, New Jersey, New York, Tennessee and Virginia.

Google has “drastically altered the supply paths” through which display advertising is sold, “reducing payouts to publishers, burdening advertisers and publishers with lower-quality matches of advertisements to inventory, and inhibiting choice and innovation across the ad tech stack,” the complaint said. Google didn't respond to requests for comment.

The viability of many websites depends on their ability to sell digital advertising space, a $20 billion industry in the U.S. that relies on ad tech to automate advertising “matchmaking” between website publishers and advertisers, said the complaint. Unlike historical media advertising, today’s online ads are “bought and sold in enormous volumes in mere fractions of a second” using an automated ad exchange that runs a high-speed auction designed to find the best match between a publisher selling internet ad space and advertisers looking to buy it.

But competition in the ad tech space is “broken” because Google “corrupted legitimate competition by engaging in a systematic campaign to seize control” of tools used by publishers, advertisers and brokers to facilitate digital advertising, alleged the complaint. Inserting itself into all aspects of the digital ad marketplace, Google used “anticompetitive, exclusionary and unlawful means to eliminate or severely diminish any threat to its dominance” in the space, it said.

Google eliminated ad tech competitors through acquisitions, including its $3 billion 2008 buy of DoubleClick, which had 60% market share then, said the complaint. Google forced publishers and advertisers to use its products “while disrupting their ability to use competing products effectively,” alleged plaintiffs. If publishers wanted to access Google Ads’ ad demand, they had to use the company’s ad server and ad exchange vs. rivals’ tools. “In effect, Google positioned itself to function simultaneously as buyer, seller, and auctioneer of digital display advertising,” it said.

Google controls the tech used by nearly every major website publisher to offer ad space for sale, the top tools used by advertisers to buy space, and the largest ad exchange that matches publishers with advertisers when ad space is sold, said the complaint. It referenced a Google ad executive who compared owning the platform, exchange and network to Citibank or Goldman Sachs owning the New York Stock Exchange.

The tech company wielded its ad tech industry power to “dictate how digital advertising is sold” and the terms on which rivals can compete, said the complaint. It “abuses its monopoly power to disadvantage” publishers and advertisers that “dare to use competing ad tech products in a search for higher quality, or lower cost, matches,” it said.

Google uses its position in the digital ad world to “funnel more transactions to its own ad tech products where it extracts inflated fees,” the complaint alleged. Google keeps at least 30 cents, “sometimes far more,” of each advertising dollar flowing from advertisers to website publishers through its ad tech tools, it said. As publishers make less money from ads, fewer publishers can offer internet content without subscriptions, paywalls or other forms of monetization, it said.

Competition for advertising dollars “is fierce both on and offline, growing even more so as the global ad market evolves with new competitors and technology," said CCIA President Matt Schruers in a statement. The governments’ contention that digital ads aren’t in competition with print, broadcast, and outdoor advertising “defies reason,” he said. CCIA finds the “radical structural remedies” proposed in the lawsuit “unjustified,” saying digital services are “competing vigorously” for ad dollars “on screens of all sizes,” dynamics that the complaint appears to disregard, Schruers said.

NAB “is paying close attention” to DOJ’s lawsuit “and is carefully reviewing the complaint,” said Senior Communications Strategist Alex Siciliano in a statement. “For years, broadcasters have been sounding the alarm over the anti-competitive practices of the Big Tech platforms, including Google," he said. The company's "dominant role" in the marketplace "has come at a steep price for local news broadcasters, who lose an estimated $2 billion annually by providing their content to these platforms under ‘take it or leave it’ terms," he said.

"We continue to work with our congressional allies to address these inequities and urge Congress to move swiftly to level the playing field," Siciliano said. NAB was a major backer during the last Congress of the Journalism Competition and Preservation Act, which would have created a limited antitrust exemption to allow news publishers to collectively bargain with tech platforms for the use of their content (see 2212070056).

News/Media Alliance General Counsel Danielle Coffey hailed the action “where a dominant monopoly is being charged for blatantly anticompetitive behavior in the digital advertising market.” Google’s behavior affects consumers’ data, prices, and the quality of information they receive, “while journalism struggles to provide valuable and critical content that informs and enriches communities across the country,” she said.