US sues Google over ‘anti-competitive’ advertising practices

The DoJ said Google's market dominance was harmful to other business in the sector, and called for the company to be broken up.

The complaint, filed on Tuesday 23 January in a Virginia federal court, accuses Google of using “anti-competitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies”.

US Attorney General Merrick Garland added Google's actions had "weakened if not destroyed competition in the ad tech industry". 

In response, Google accused the DoJ of "doubling down on a flawed argument".

The legal dispute is the agency’s first antitrust lawsuit against a tech giant under President Joe Biden and an escalation in legal pressure on one of the world’s biggest internet companies.

The lawsuit said Google had “corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers and brokers to facilitate digital advertising”.

It also accused the Big Tech company of having “pervasive conflicts of interest” because it controls numerous aspects of the digital ad market.

“In effect, Google positioned itself to function simultaneously as buyer, seller, and auctioneer of digital display advertising,” it said.

During a press conference, Garland said Google's anti-competitive behaviour had led to lower ad revenues for websites and publishers, as well as higher advertising costs for marketers during the past 15 years. 

US prosecutors estimated that Google took more than 30 per cent of all the digital advertising dollars flowing through its products.

The complaint even named the US Army as one of multiple government advertisers using Google’s tools that had been harmed by the company's practices. 

The plaintiffs asked the US District Court for the Eastern District of Virginia to force Google to sell much of its suite of ad technology products, which include software for buying and selling ads, a marketplace to complete the transactions, and a service for showcasing the ads across the internet. 

The court filing quoted a Google product manager who wrote: “Our goal should be all or nothing – use AdX as your [exchange] or don’t get access to our [advertising] demand.”

The eight states joining the suit include California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia.

For years, Google’s critics have claimed that the company’s extensive role in the digital ecosystem that enables advertisers to place ads, and for publishers to offer up digital ad space, represents a conflict of interest that Google has exploited anticompetitively.

Google, whose advertising business is responsible for about 80 per cent of its revenue, said the government was "doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow".

It added that the suit “attempts to pick winners and losers in the highly competitive advertising technology sector”.

Google is the market leader, but its slice of total US digital ad income has fallen from 36.7 per cent in 2016 to 28.8 per cent in 2022, according to market research firm Insider Intelligence.

This is the fifth antitrust lawsuit filed by US officials against Google since 2020, as lawmakers and regulators around the world try to rein in the power that big tech companies exert over information and commerce online.

Earlier this week, Google's parent company Alphabet announced it was letting go of 6 per cent of the group’s global workforce in the latest round of layoffs to hit the tech industry.