Justice Department Sues to Break Up Google’s Advertising Empire
The U.S. Department of Justice and a coalition of eight states launched an antitrust suit against Google on Tuesday, demanding the dissolution of the company’s online ad business.
This latest legal action follows more than two years of investigation and collaboration between the agency and state attorneys general, who have previously filed a suit alleging that Google’s search and search advertising practices violate U.S. antitrust laws.
The Justice Department alleges that Google’s suite of online advertising tools impedes competitors from entering the online advertising market and prevents publishers from profiting from their own content.
The department further claims that Google is unlawfully utilizing its monopoly power, and should be forced to divest several entities that allow it to carry out the allegedly illegal actions.
The DOJ claims that Google has engaged in unfair practices that have hindered competition in the digital advertising industry by raising barriers to entry, forcing key competitors out of the market, and discouraging potential competitors from entering the market.
This has resulted in Google having a dominant market position and has allowed them to take excessive profits while hindering innovation and fair market functioning for the benefit of advertisers and publishers.
The DOJ is requesting that Google divest its Google Ad Manager suite, including DFP and AdX. As a result of this news, shares of Google’s parent company, Alphabet, decreased by 1.6%.
DOJ Lawsuit Against Google
According to John Lopatka, a law professor at Pennsylvania State University, the significance of the legal case against Google becomes more substantial with the Justice Department’s new lawsuit.
Lopatka stated that the expansion of the litigation expands the scope of the case for Google and makes it more difficult for them to reach settlements with the increasing number of plaintiff groups.
He also pointed out that a victory for the DOJ would have a more significant impact on private plaintiffs by solidifying Google’s responsibility for their anti-competitive behavior that caused harm, as opposed to a victory for the states, which would only require private plaintiffs to prove damages.
Google has been reached out to by Yahoo Finance for comment and the story will be updated when a response is received.
Before the Department of Justice’s filing, Alphabet proposed to divide its ad auction and ad placement operations in an attempt to alleviate the DOJ’s antitrust concerns.
However, according to The Wall Street Journal, the proposed split would still keep the separate entities under the umbrella of Alphabet’s parent company.
Google has faced ongoing criticism from both domestic and international legislators and regulators regarding its dominant presence in various online and mobile markets.
Over a decade ago, the European Commission, the European Union’s antitrust watchdog, imposed a fine of roughly $10 billion (8.6 billion euros) on the company for three separate antitrust violations.
In 2017, the Commission accused the company of exploiting its market dominance in search and, in 2018, of exploiting its market power in the mobile space by preloading its own apps on new Android phones.
In 2019, the company was once again penalized for preventing its competitors from collaborating with companies that had agreements with Google’s AdSense platform.