Google's dominance of the online advertising and ad tech markets violates US antitrust laws, a federal court ruled on Thursday, marking the second major antitrust loss for the company in the past year.
The federal government and 17 states sued Google, alleging its ad tech monopoly lets it charge higher prices and take a bigger portion of each sale. The lawsuit seeks to force Google to sell off parts of its ad network that place ads on third-party websites, a division that makes up about 12% of Alphabet’s total business.
The court decided that Google had a monopoly over two of the three parts of the online advertising market:
✅ The tools used by online publishers, like news sites, to host open ad space: Google is a monopoly
✅ The tools advertisers use to buy that ad space: Google is a monopoly
❌ The software that facilitates those transactions: Google is not a monopoly
Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia ruled in a 115-page opinion:
“Google has violated Section 2 of the Sherman Act by willfully acquiring and maintaining monopoly power in the open-web display publisher ad server market and the open-web display ad exchange market, and has unlawfully tied its publisher ad server (DFP) and ad exchange (AdX) in violation of Sections 1 and 2 of the Sherman Act.”
The decision precedes another hearing to determine what Google must do to restore competition in those markets, such as sell off parts of its business.
Lee-Anne Mulholland, Google's VP for regulatory affairs, said in a statement:
“We won half of this case and we will appeal the other half. The Court found that our advertiser tools and our acquisitions, such as DoubleClick, don't harm competition. We disagree with the Court's decision regarding our publisher tools. Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.”
That's two big antitrust rulings for Google.
Another federal judge ruled in August that Google had a monopoly in online search and is now considering a request by the Justice Department to break up the company, with a three-week hearing on the matter scheduled to begin today.
The two rulings could potentially lead to Google being broken up in various ways.
In other hard times for Google this week:
- Japan's Fair Trade Commission issued a cease-and-desist order against Google, accusing it of violating the nation's anti-monopoly law by compelling smartphone manufacturers to preinstall its apps on Android devices. This landmark decision marks the first time Japan has taken such action against a US Big Tech company.
- Google is facing a £5B lawsuit in the UK that claims the company abused its position to restrict competing search engines from gaining market share, and in turn, leveraged its dominant position in the market to drive up ad prices.. The suit is being brought on behalf of all UK-based organizations that used Google's search advertising services from Jan 1, 2011 up until when the claim was filed.
Tough week for Google! Can't say they didn't have it coming though…