Alexandra McHugh – On January 24, 2023, the Justice Department, along with the Attorneys General of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia, filed a civil antitrust suit against Google in the Eastern District of Virginia. The Government’s complaint alleges that Google monopolizes crucial digital advertising technologies, denying the American public a free and competitive market whereby website publishers and advertisers create in an open and vibrant Internet. In violation of Section 1 and 2 of the Sherman Act, Google has allegedly engaged in anticompetitive conduct that eliminates ad-tech competitors through acquiring key digital advertising tools necessary for website publishers to sell advertising space and restricting advertiser and publisher use to Google’s acquired tools. Google’s acquisition of these crucial ad-tech tools (such as publisher ad server, advertiser ad network, and ad exchange depicted in the image above) insulates Google from competition and stunts rival technologies’ growth.
Google will likely file a response to the Justice Department’s claim that over the last 15 years Google has grown to monopolize online advertising. Consequent to the Justice Department’s January 24, 2023 filing, Google’s vice president, Dan Taylor, remarked that “It is well reported that competition is increasing as more and more companies enter and invest in building their advertising businesses”, citing examples like Microsoft acquiring Xandr – an advertising platform with full ad-tech – and Apple creating its own demand-side advertising platform. Google argues that the Justice Department’s complaint calls to unwind two acquisitions reviewed by U.S. regulators 12 years ago (AdMeld) and 15 years ago (DoubleClick). If completed as the Justice Department hopes, this undoing would rewrite history at the expense of publishers, advertisers, and Internet users by ostensibly slowing innovation, raising advertising fees, and making it more difficult for thousands of small business and publishers to grow.
One Google advertising executive aptly begged the question: “Is there a deeper issue with us owning the platform, the exchange, and a huge network? The analogy would be if Goldman or Citibank owned the NYSE.” Google is owned by Alphabet Inc. which earned some $260 billion in revenue in 2021, of which $31.7 billion came from Google’s ad-tech system. Google keeps at least thirty cents (and sometimes far more) of each advertising dollar spent by advertisers on its platform. Section 2 of the Sherman Act makes it illegal for a single company to “monopolize, attempt to monopolize, or combine or conspire” to monopolize. Google’s manipulation of advertising prices while the company commands about 30 percent of the U.S. digital advertising market suggests a violation of Section 2 of the Sherman Act. Google has power over price and measures a large part of the U.S. market share, appearing to possess the essential ingredient of a Section 2 Sherman Act case: anticompetitive market power.
The Justice Department originally sued Alphabet Inc. for antitrust violations in October of 2020, marking the most aggressive United States legal challenge to a company’s dominance in the ad-tech sector in more than two decades (last major Section 2 of the Sherman Act case was United States v. Microsoft Corporation in 1998). Filed in the District of Columbia, the Government’s complaint alleges that Alphabet Inc. uses billions of dollars collected from advertisements on Google to “revenue share” with mobile device and computer web browser search access points, such as Apple Inc.’s Safari, to keep Google as their default search engine. Google accounts for nearly 88 percent of all general-search-engine queries in the United States and almost 95 percent of queries on mobile devices. It created a self-reinforcing cycle of dominance, and the Justice Department and eleven state jurisdictions brought an action under Section 2 of the Sherman Act, 15 U.S.C. §2 attempting to restrain Google’s monopoly in general search services and search advertising. This 2020 claim is independent from the digital advertising technology market at issue in the Justice Department’s January 24, 2023 complaint against Google and is scheduled for trial in September 2023.
Ahead of the 2020 presidential election, Joe Biden declined to specifically comment on United States, et al. v. Google LLC (2020), but Biden’s spokesman Bill Russo contended that “growing economic concentration and monopoly power in our nation today threatens our American values of competition, choice, and shared prosperity.” President Biden issued an executive order promoting competition in the American economy on July 9, 2021. The Justice Department’s 2023 lawsuit filed against Google reflects a growing, bipartisan consensus that the United States federal government must diverge from their 1970’s-era pro-consolidation antitrust approach, which interpreted Section 2 of the Sherman Act under the premises that a hands-off federal government and firm dominance are good because they create efficiencies and reward superior business models. Remarkably, the Justice Department additionally opted for a jury trial in their 2023 antitrust case against Google, likely seeking to sidestep a conservative judiciary that has often aligned with large corporations for decades. The Justice Department’s 2023 antitrust suit filed against Google is the fifth antitrust case filed by the Justice Department against tech-conglomerates since 2020, and the first attempt at an enforcement action against monopolization for damages in a civil antitrust violation in nearly half a century. As such, the suit signals that the federal government will not back down from enforcing American antitrust laws.
