The US Department of Justice and eight states on Tuesday sued Google over its online advertising business, alleging it abused its monopoly to the detriment of advertisers and publishers.
The DOJ’s complaint – which you can read in full below – has been filed in federal court in Virginia. It alleges that Google has “corrupted legitimate competition in the ad tech industry” by taking control of online advertising systems and “inserting itself into all aspects of the digital advertising market.” Google has allegedly done this by eliminating competition through acquisitions and using its dominance to trick advertisers into using its products over those of others. The lawsuit only names Google as a defendant and no individuals. It’s also asking Google to sell part of its ad tech business.
The Justice Department also said that Google penalizes sites that “dare to use competing ad tech products” and uses its dominance in ad tech to “direct more transactions to its own ad tech products, where.” it pulls out excessive fees to line its own pockets at the expense of the advertisers and publishers it claims to serve.”
The case is the latest example of government efforts to contain Big Tech. The world’s most financially successful companies wield immense power over our lives and over businesses around the world.
Google rejected the allegations.
“Today’s lawsuit by the DOJ seeks to pick winners and losers in the highly competitive ad technology sector,” said Dan Taylor, Google’s head of ads, in a blog post. The Justice Department’s lawsuit largely duplicates a “baseless lawsuit” by Texas Attorney General Ken Paxton that was dismissed in federal court, Google argued. The Justice Department’s case is flawed and will “slow down innovation, increase advertising fees and make it harder for thousands of small businesses and publishers to grow,” Taylor said.
The Justice Department did not respond to a request for comment.
Though there are some similarities to the Texas case, the Justice Department conducted its own year-long investigation that showed Google had “numerous monopolies,” Assistant Attorney General Jonathan Kanter said at a news conference Tuesday.
The Justice Department’s lawsuit is a rare instance in which the Department has called for the dissolution of a large corporation. Other examples include the confrontations with mainframe maker IBM in the 1970s, telephone giant AT&T in 1982 and Windows inventor Microsoft in 2000.
It comes as governments around the world try to contain Big Tech. Last year, the US Senate considered the American Innovation and Choice Online Act to curb the influence of Amazon, Apple and Google on digital marketplaces. Last year, Google was fined in France for user tracking and agreed to a $391.5 million settlement with attorneys general over location-tracking practices.
Kanter said Google’s dominance in digital ads is the equivalent of banking firms like Goldman Sachs or Citibank, which own the New York Stock Exchange. Google has been doing this behavior for 15 years, driving up advertising costs, cutting website revenue, stifling innovation and “flattening our public marketplace of ideas,” he said. Kanter also claimed Google’s behavior harmed the US government and military.
Among the examples of alleged abuse, Kanter told Google:
- Using affiliation agreements to embed content creators into Google’s system.
- Manipulated ad auctions by gaining first-look and last-look advantages over the bidding process.
- Blocked websites from using competing technologies and penalized those who tried.
- Competitor Bid Data Collected and Used.
Kanter also used information from Google documents and employees to argue for the company’s dominance:
- A Google employee said the company’s ad exchange is an “authoritarian intermediary.”
- Senior executives said switching ad servers is “a nightmare” for publishers that is “an act of God.”
- A Google executive said: “Our goal should be all or nothing. Use Google’s Ad Exchange or you won’t get access to our advertisers’ demand.”
- A Google employee said the company “overcharged” advertisers $3 billion a year and passed the money on to publishers to get them to stick with Google’s ad technology.
- A Google executive explained the steps to “dry up” competitors.
The Computer and Communications Industry Association, a technology lobby group, sided with Google despite previous support for “reasonable” government intervention: “We believe this lawsuit and the radical structural remedies it proposes are unwarranted.” Digital services compete fiercely for advertising dollars on screens of all sizes, and the complaint appears to ignore these dynamics as well as macro trends in the global advertising market,” the group said in a statement.
This is the Justice Department’s second antitrust lawsuit against Google, but the Biden administration’s first. An October 2020 case filed during the Trump administration alleged that Google blocked competitors by making deals with Apple and Samsung to be the default search engine on their devices.
Google is also facing an antitrust lawsuit led by Texas along with 16 states and territories alleging the search giant worked with Facebook to give the social network an advantage in online ad auctions. The Department of Justice can also sue under the Clayton Antitrust Act if the federal government believes it has been harmed.
Last year, Google tried to fend off the Justice Department’s lawsuit by offering to split up its ad tech business, the Wall Street Journal reported.
CNET’s Stephen Shankland contributed to this report.