US sues Google over digital ad dominance

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The US Justice Department and eight states have filed an antitrust suit against Google, seeking to shatter its alleged monopoly on the entire ecosystem of online advertising as a hurtful burden to advertisers, consumers and even the US government.

The government alleges that Google’s plan to assert dominance in online ads has been to “neutralise or eliminate” rivals through acquisitions and to force advertisers to use its products by making it difficult to use competitors’ offerings.

It’s part of a new, if slow and halting, push by the US to rein in big tech companies that have enjoyed largely unbridled growth in the past decade and a half.

The antitrust suit was filed in federal court in Alexandria, Virginia.

Attorney-General Merrick Garland said in a news conference on Tuesday that “for 15 years, Google has pursued a course of anti-competitive conduct” that has halted the rise of rival technologies and manipulated the mechanics of online ad auctions to force advertisers and publishers to use its tools.

“First, Google controls the technology used by nearly every major website publisher to offer advertising space for sale. Second, Google controls the leading tool used by advertisers to buy that advertising space. And third, Google controls the largest ad exchange that matches publishers and advertisers together each time that ad space is sold,” Attorney-General Garland said.

As a result, “website creators earn less and advertisers pay more”, and this means fewer publishers can offer their content without subscriptions, paywalls and other fees to make up for revenue.

The department’s suit accuses Google of unlawfully monopolising the way ads are served online by excluding competitors.

This includes its 2008 acquisition of DoubleClick, a dominant ad server, and subsequent rollout of technology that locks in the split-second bidding process for ads that get served on web pages.

Google’s ad manager lets large publishers who have significant direct sales manage their advertisements. The ad exchange, meanwhile, is a real-time marketplace to buy and sell online display ads.

The lawsuit demands that Google break off three different businesses from its core business of search, YouTube and other products such as Gmail: the buying and selling of ads and ownership of the exchange where that business is transacted.

Digital ads account for about 80 per cent of Google’s revenue. But the company, along with Facebook’s parent company Meta, has seen its market share decline in recent years as smaller rivals grab bigger portions of the online advertising market.

Alphabet Inc, Google’s parent company, said the suit “doubles 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”.

The US government is increasingly looking to rein in Big Tech’s dominance, although such legal action can take years to complete and Congress has not passed any recent legislation seeking to curb the influence of the tech industry’s largest players.

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