Warning: This article includes discussions on legal proceedings and antitrust issues involving major tech companies.
The U.S. government is challenging Google’s highly profitable ad tech business in a major antitrust trial set to begin on Monday. The Department of Justice (DoJ) alleges that Alphabet, Google’s parent company, illegally monopolizes the digital advertising market, using its dominance to stifle competition and innovation.
The Scale of Google’s Ad Tech Business
Google’s ad tech operations are a significant revenue driver, generating over $200 billion (£152 billion) last year through ad placements and sales. Alphabet argues that its market success stems from the effectiveness of its services. However, the DoJ contends that Google has leveraged its market power to suppress rivals and maintain its dominant position.
Laura Phillips-Sawyer, a professor at the University of Georgia School of Law, emphasized the broader impact of the case. “It is a really important industry that grabs billions of consumer dollars every year,” she said. “I think all consumers have an interest in this litigation.”
Previous Antitrust Challenges
This trial marks the second major antitrust case against Google in the U.S. Earlier in August, a judge ruled that Google’s dominance in search was illegal, though the specific penalties remain unclear. The new case focuses on Google’s control over the digital ad marketplace and its impact on competition.
The lawsuit, filed in 2023, claims that Google has used its ad tech monopoly to hinder innovation and limit market competition. In response, Google maintains that it is one of many companies providing digital ad services and that competition is thriving, pointing to the growth of rivals like Apple, Amazon, and TikTok.
Legal Proceedings and Challenges
US District Judge Leonie Brinkema will oversee the trial, while the recent ruling by Judge Amit Mehta in a separate case has heightened the scrutiny on Google. Mehta’s decision in August labeled Google as a monopolist in its search business, potentially influencing the ad tech case.
Dan Ives, managing director at Wedbush Securities, predicts that any remedies imposed on Google will involve adjustments to its business model rather than a complete breakup of the company. “The DoJ clearly had a big win, and they’re going to ride that momentum,” Ives told the BBC.
The complexity of ad tech might pose challenges for the DoJ. Rebecca Haw Allensworth, an antitrust professor at Vanderbilt University Law School, noted that while search is widely understood, ad tech’s intricate nature could complicate the government’s arguments.
Global Regulatory Scrutiny
The scrutiny is not limited to the U.S. On Friday, the UK’s Competition and Markets Authority (CMA) reported its initial findings that Google might be abusing its dominance in the ad tech sector. The CMA’s investigation suggested that Google’s practices could harm UK publishers and advertisers. Google responded by criticizing the CMA’s understanding of the ad tech market.
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