A US judge concludes that Google has unlawful monopolies in the ad tech industry.
A judge decided Thursday that Alphabet’s (GOOGL.O) Google unlawfully controls two marketplaces for online advertising technologies, giving the tech giant yet another setback and opening the door for U.S. antitrust authorities to pursue a dissolution of its advertising business.
In Alexandria, Virginia, U.S. District Judge Leonie Brinkema ruled that Google was accountable for “willfully acquiring and maintaining monopoly power” in the marketplaces for publisher ad servers and ad exchanges, which act as a middleman between buyers and sellers.
The ruling opens the door for a new hearing to decide what Google needs to do to reestablish competition in those countries, including selling off a portion of the company at an unscheduled trial. Following a similar ruling in a case involving online search, this is the second court decision that Google has an illegal monopoly.
Websites utilize publisher ad servers as platforms to host and manage their inventory of digital ads. The technology enables news publishers and other online content providers to profit from the sale of advertisements in addition to ad exchanges. According to Brinkema, the money represent the “lifeblood” of the internet.
“In addition to depriving rivals of the ability to compete, this exclusionary conduct substantially harmed Google’s publisher customers, the competitive process, and, ultimately, consumers of information on the open web,” concluded Brinkema.
She wrote, however, that a different allegation that the business had a monopoly in advertising ad networks was not proven by antitrust authorities.
The decision was hailed by U.S. Attorney General Pamela Bondi as “a landmark victory in the ongoing fight to stop Google from monopolizing the digital public square.”
“This Department of Justice will continue taking bold legal action to protect the American people from encroachments on free speech and free markets by tech companies,” she stated.
Google will appeal the decision, according to Lee-Anne Mulholland, vice president of regulatory affairs.
She stated, “We won half of this case and we will appeal the other half,” adding that the business rejects the ruling about its publisher tools. “Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.”
Google’s stock fell 1.4% following the decision on Thursday. According to experts who previously spoke to Reuters, the software behemoth best known for its search engine would suffer little financial harm from a loss in the lawsuit.
According to the DOJ, Google ought to be forced to sell off at least its Google Ad Manager, which consists of the business’s ad exchange and publisher ad server.
According to a September Reuters article, Google has previously considered selling its ad exchange in order to satisfy European antitrust authorities.
A Democrat from Minnesota and former head of the antitrust subcommittee, U.S. Senator Amy Klobuchar, described the decision as “a big win for consumers, small businesses, and content creators that will open digital markets to more innovation and lower prices.”
POINT OF INFLECTION
Running moment Capital’s chief investment officer, Michael Ashley Schulman, referred to the decision as a “major inflection point” for Google and the internet industry, highlighting the willingness of US courts to consider “aggressive structural remedies” in antitrust cases.
“This could increase regulatory risk premiums across major tech stocks, especially those like Amazon and Meta that operate similarly integrated ecosystems,” he stated.
The U.S. Federal Trade Commission is suing Meta Platforms (META.O) in a different antitrust complaint, alleging that the company that owns Facebook, Instagram, and WhatsApp has an unlawful monopoly in personal social networks. Amazon.com (AMZN.O) has been charged by the FTC with illegally controlling online retail markets. Apple (AAPL.O) has also been sued by the DOJ on the grounds that it controls a monopoly on smartphones.
The persistent bipartisan appeal of antitrust enforcement is demonstrated by the fact that those cases have been pursued during both Republican and Democratic administrations, including the first and second terms of US President Donald Trump.
Google might now be ordered to sell assets or alter its business operations by two U.S. courts. The DOJ’s proposal that Google sell its Chrome browser and take other steps to end its dominance in internet search will go to trial next week before a court in Washington.
The DOJ and a group of states said Google employed traditional monopoly-building strategies during a three-week trial on the company’s advertising business last year. Prosecutors claimed throughout the trial that these strategies included snuffing out rivals through acquisitions, entangling clients in the use of its goods, and regulating the way transactions took place in the internet ad market.
As digital ad spending migrated to apps and streaming video, Google claimed that the case ignored competition from tech giants like Amazon and Comcast (CMCSA.O) and concentrated on the past, when the company was still working on making its tools possible to connect to competitors’ goods.
Brinkema denied allegations regarding the acquisitions in her decision on Thursday. However, she claimed that Google had unjustly linked publishers’ usage of its exchange product to their use of its ad server and had implemented anticompetitive practices that were “not in its publisher customers’ best interests.”
