Connect with us
ADVERTISEMENT

Technology At Home

The US accuses Google of corrupting competition in digital advertising

ADVERTISEMENT

WASHINGTON, Jan. 24 (Reuters) – The US Justice Department on Tuesday filed a lawsuit against Alphabet’s Google (GOOGL.O) over allegations that the company abused its dominance in digital advertising.

“Google has used anti-competitive, exclusive and illegal means to eliminate or seriously mitigate any threat to its dominance over digital advertising technologies,” the government said in its antitrust complaint.

The Justice Department asked the court to force Google to divest its Google Ad Manager suite, including its Ad Exchange AdX.

Google said the lawsuit “doubles down on a flawed argument that would slow innovation, increase advertising costs and make it harder for thousands of small businesses and publishers to grow.”

The lawsuit is the second federal antitrust complaint filed against Google, alleging antitrust violations in how the company gains or maintains its dominance. The Justice Department lawsuit filed against Google in 2020 focuses on its search monopoly and is expected to go to trial in September.

Eight states joined the division in the lawsuit filed Tuesday, including Google’s home state of California.

Shares of Google fell 1.6 percent on Tuesday.

The lawsuit is tackling a pivotal company at Google that accounts for 80 percent of its revenue and represents the latest swipe at Big Tech’s market power by the administration of US President Joe Biden, a Democrat. The 2020 lawsuit was filed during the tenure of Biden’s predecessor Donald Trump, a Republican.

The lawsuit says: “Google has thwarted meaningful competition and deterred innovation in the digital advertising industry, taking supra-competitive profits for itself, preventing the free market from functioning fairly in order to support the interests of the advertisers and publishers who use the powerful internet. make possible today.”

PROJECT POIROT

While Google remains by far the market leader, its share of digital ad revenue in the US is eroding, falling from 36.7% in 2016 to 28.8% last year, according to Insider Intelligence.

ADVERTISEMENT

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

The lawsuit details a number of attempts by Google to dominate the advertising market, with the government claiming the company has the “technical tools to quell the threat.” The complaint was about header bidding, a way companies could bypass Google to bid for ad space on websites.

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

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

Reporting by Diane Bartz and David Shepardson; edited by Grant McCool

Our Standards: The Thomson Reuters Principles of Trust.

Diane Bartz

Thomson Reuters

Focused on US antitrust and corporate regulation and law, with experience covering war in Bosnia, elections in Mexico and Nicaragua, as well as stories from Brazil, Chile, Cuba, El Salvador, Nigeria and Peru.