Connect with us


US targets Google’s online advertising business monopoly in latest Big Tech lawsuit



new Now you can listen to Insurance Journal articles!

The US Justice Department on Tuesday accused Alphabet Inc’s Google of abusing its dominance in digital advertising, threatening to erode the core business of one of Silicon Valley’s most successful Internet companies.

The government said Google may be forced to sell its Ad Manager suite in 2021 to deal with a business that generates about 12 percent of Google’s revenue, but also plays a key role in the search engine and cloud company’s overall sales. Is.

The antitrust complaint states, “Google has used anticompetitive, exclusionary and illegal methods to eliminate or severely reduce any threat to its dominance over digital advertising technologies.”

Google, whose advertising business is responsible for about 80% of its revenue, said the government was “doubling down on flawed logic that will slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.” Will make it.”

The federal government has said its Big Tech probe and lawsuits are aimed at smaller rivals to level the playing field for a group of powerful companies that includes, Facebook owner Meta Platforms and Apple Inc.

“By suing Google for monopolizing advertising technology, the DOJ is at the center of the power of the Internet giants today,” said Charlotte Sleiman, director of competition policy at Public Knowledge. “The complaint outlines a number of Google’s anti-competitive strategies that have pushed our Internet ecosystem back.”

Tuesday’s lawsuit by the administration of President Joe Biden, a Democrat, follows a 2020 antitrust lawsuit brought against Google during the term of Donald Trump, a Republican.

The 2020 lawsuit alleges antitrust law violations in how the company gained or maintained its dominance with its monopoly in online search and is set to go to trial in September.

eight states in litigation

Eight states joined Tuesday’s lawsuit, including Google’s home state of California.

California state attorney general Rob Bonta said Google’s practices “suppressed creativity in a space where innovation is key.”

Colorado Attorney General Phil Weiser said that Google’s dominance had offered higher fees for advertisers and less money for publishers with ad space. “We are taking action by filing this lawsuit to end Google’s monopoly and restore competition in the digital advertising business,” they said in a statement.

Google shares fell 1.9 percent on Tuesday.

In addition to its famous search, which is free, Google generates revenue through its interlocking advertising technology businesses. The government asked for disinvestment of the Google Ads Manager suite, including Google’s ad exchange, AdX.

Google Ads Manager is a suite of tools, including a tool that allows websites to offer advertising space for sale and an exchange that serves a marketplace that automatically matches advertisers with those publishers. Has an account.

Advertisers and website publishers have complained that Google is not transparent about where advertising dollars go, specifically how much goes to publishers and how much to Google.

The lawsuit raises concerns about certain products in the ad tech stack, where publishers and advertisers use Google’s tools to buy and sell ad space on other websites. That business was worth about $31.7 billion in 2021, or 12.3 percent of Google’s total revenue. About 70% of that revenue goes to the publishers.

An ad tech divestment “may not be a game changer but it could be critical to Google’s ad targeting capability,” said Paul Gallant with Cowen Washington Research Group.

“It connects to all of Google’s other businesses and ties them together. I think Google is more concerned about losing ad technology down the road than people might think,” Gallant said.

The company made a series of purchases, including DoubleClick in 2008 and AdMob in 2009, to help make it a major player in online advertising.

‘Project Pirot’

According to Insider Intelligence, while Google remains the longtime market leader, its share of US digital advertising revenue has dropped from 36.7% in 2016 to 28.8% last year.

The Justice Department sought a jury to decide the case, which was filed in the US District Court for the Eastern District of Virginia.

The lawsuit underscores Google’s many attempts to dominate the advertising market.

The complaint discussed header bidding, which was a way that companies could bypass Google to bid for advertising space on websites.

It spawns a series of projects including one called “Project Poirot”, named after Agatha Christie’s master detective, Hercule Poirot. The project was designed to “effectively identify and respond to ad exchanges that have adopted header bidding technology.”

The 149-page complaint said Google doubled down after the initial success of Project Poirot in manipulating its advertisers’ spending to reduce competition from rival ad exchanges. Rival AppNexus/Xandr would lose 31% of DV360 advertiser spending, Rubicon would lose 22%, OpenX would lose 42%, and PubMatic would lose 26%, the complaint said.


Source link

Click to comment

Leave a Reply

Your email address will not be published.