Ritika Janiya
The US government is going head-to-head against one of the world’s largest companies, Google, over its dominant and lucrative advertising technology business. The battle starts this Monday, when the Department of Justice will argue that Google’s parent company, Alphabet, runs an illegal monopoly in the digital ad market. But Alphabet says it succeeds simply because its services are so effective, not because of any unfair practices.
Why is this important?
Google’s ad business is a money-printing machine, taking in upwards of more than $200 billion in revenue last year alone. Internet users see the millions of ads it places every day. That has been the company’s main source of income. “It’s an extremely important industry that involves billions of consumer dollars annually,” says Laura Phillips-Sawyer, a law professor at the University of Georgia School of Law. “All consumers have a stake in this lawsuit.”
It’s not the first time the search giant has found itself in legal hot water over its business practices. Another major case wrapped up in September, with a judge deciding that Google’s stranglehold over online searches was unlawful. Still, it remains unclear what consequences Google and its parent company, Alphabet, will suffer as a result of that ruling.
Case Against Google
The Department of Justice, in a lawsuit filed in 2023, accused Google of abusing its market power with the aim of quashing competition and stymying new ideas in the digital ad marketplace. A coalition of states joins in the lawsuit, contending that because of the dominance wielded by Google, other companies will never get a fair shot.
But Google disagrees. It argues that it is only one of many companies in the digital ad space. It says evidence to this growing success from competitors can be seen with Apple, Amazon, and TikTok-competition, in fact, is increasing.
What Are the Stakes?
In January 2023, U.S. Attorney General Merrick Garland named it “illegal conduct that allowed Google to halt the rise of rival technologies.” The government and the tech company will argue their positions before District Judge Leonie Brinkema of the U.S., who will rule on the case.
The trial comes after another major ruling against Google last month in which Judge Amit Mehta ruled that the company had illegally squashed its online search business. “Google is a monopolist, and it has acted as one to maintain its monopoly,” he wrote.
What does Google say in defense?
For its part, Google says it’s only offering a superior product to its rivals, which is why it’s leading the online search and digital ads markets. The company also said no one was compelled to use its advertising services; its services were used because they are effective. Google pointed to a 2023 blog post that quoted, “No one is forced to use our advertising technologies – they choose to use them because they’re effective.”
With the trial moving forward, Google’s fate is up in the air. Judge Mehta, who presided over the first case, held a status conference on Friday to start deciding what Google should do to make things right after its illegal conduct. “The DoJ clearly had a big win, and they’re going to ride that momentum,” Dan Ives said, managing director at Wedbush Securities. He believes that the company will need to change its business model, but not to the extent of a breakup order.
The Challenge Ahead
That may not be a slam-dunk for the government, however. Everybody knows how search engines work, and ad technology is infinitely more arcane. As Rebecca Haw Allensworth, an antitrust professor at Vanderbilt University Law School, said, “Advertising technology is so complex it may pose a real challenge for the government to make an understandable, straightforward argument that Google’s creates a monopolized market.”
Google also faces pressure from outside the U.S. On Friday, the UK’s Competition and Markets Authority said it found Google was using unfair practices to control the market for online ad technology. According to an initial investigation, such actions could be harming thousands of UK publishers and advertisers. Google said the UK decision was based on a “flawed” understanding of the ad tech sector.
What Happens Next?
The outcome of this trial perhaps might say a lot about how digital advertising would function in times to come. If Google were to lose the trial, that could mean strict regulation or even forced corporate adjustment of strategy. It may also encourage further lawsuits and regulation in other countries, further to cleave into Google’s powerful position in the global market.
Until now, eyes have been in the court as Google tries to plead its case for its business practices. Will the search giant keep the crown or will it face new restrictions on how it will operate in the world of digital ads? Only time will tell.
