The US has sued Google for antitrust violations in its ad-tech business


The Justice Department is seeking to block Google’s business brokerage digital ads from spreading across much of the Internet, a major expansion of legal challenges the company faces in the U.S. and abroad.

The Department of Justice’s second indictment against Alphabet was filed Tuesday Inc.

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In the year Following the episode of 2020, Google abused its role as one of the largest brokers, providers and online auctions of websites and mobile applications. The filing promises a protracted antitrust battle with far-reaching implications for the digital-advertising industry.

The suit, filed in federal court in Virginia, alleges that Google abuses its monopoly power in the ad technology industry, hurting web publishers and advertisers who try to use competing products.

The lawsuit asks the court to overturn Google’s “anti-competitive acquisitions,” such as the 2010

“Google uses its dominance in digital ad technology to invest in additional transactions for its own ad technology products, charging inflated fees at the expense of the advertisers and publishers it serves,” the complaint reads.

A Google spokesperson said the lawsuit “attempts to pick winners and losers in the highly competitive ad technology sector.”

“DOJ is doubling down on a misguided argument that slows innovation, increases advertising fees, and causes thousands of small businesses and publishers to grow,” the spokesperson said.

Big tech companies like Google are under siege from lawmakers and regulators on several continents who target the companies’ dominance of online markets. Justice Department officials are also investigating Apple. Inc.

The Federal Trade Commission sued the meta platforms Inc

Facebook section on antitrust lawsuits and Microsoft Corporation

To block the proposed $75 billion acquisition of Activision Blizzard Inc.

President Biden recently urged lawmakers from both parties to unite behind legislation that seeks to regulate tech giants. The European Union has opened cases regarding alleged anti-competitive practices by Google, Meta and other companies.

The Department of Justice in 2011 The 2020 lawsuit against Google targeted its position in online search markets, including its agreement to make Google search the default in Apple’s Safari web browser. Google is fighting the case and is expected to go to trial this year.

Alphabet gets 80% of its business from advertising. The Justice Department’s new indictment targets the ad business subdivision, which organizes the buying and selling of ads on other websites and apps. Google reported $31.7 billion in revenue from that ad brokerage activity in 2021, or 12% of Alphabet’s revenue. Google distributes 70% of its revenue to web publishers and developers.

Last year, Google offered to spin off its ad tech business into a separate company under the Alphabet umbrella to fend off a recent Justice Department investigation. Justice Department officials declined the request and decided to pursue the lawsuit instead.

For years, Google has faced accusations from advertising- and media-industry executives, lawmakers and regulators that its presence in multiple places in the online ad-buying process hurts publishers and gives it an unfair advantage over its rivals. Google, which runs the most popular search engine and the largest online video-streaming site, YouTube, has sparked accusations that it has skewed the market for its own benefit.

Google’s power in digital advertising stems from a series of acquisitions that Google has used to build its ad technology business, its competitors say. The FTC approved the merger in a controversial ruling. Google also bought several other startups, including mobile advertising company AdMob.

“After inserting itself into the entire digital advertising marketplace, Google used anticompetitive, exclusionary, and illegal means to eliminate or substantially reduce any threat to its dominance in digital advertising technologies,” the complaint reads.

Google has said it has no plans to sell or exit ad technology. The state attorney general has strongly disputed the claims in the lawsuit, which contains allegations similar to the Justice Department’s complaint. A federal judge rejected Google’s highest-profile motion to dismiss the case last year, allowing it to proceed to the discovery phase and eventually to trial.

Any verdict against Google in the Justice Department’s new lawsuit could have a major impact on the online advertising industry, which has recently been showing signs of weakness as consumers dial back purchases in response to worsening economic conditions.

Separating Google’s ad technology business from the rest of the company could resolve years of litigation. Depending on the outcome of the case, ad tech executives say the results could range from higher ad dollars flowing to publishers to lower overall spending because digital ads are more efficient than Google.

The Justice Department’s case echoes in some ways an investigation launched in 2021 by the EU’s top antitrust watchdog, as well as the UK’s Competition and Markets Authority. Those probes are looking into allegations that Google favors its own ad-buying tools in its ad auctions, but are also looking at other elements of Google’s ad-Eurotech business. For example, the European Union is considering Google’s exclusion of ad-buying on its video site YouTube from brokers.

Google has attempted to address many of these claims. In addition to offering to partially divest its ad-tech business to avoid a Justice Department lawsuit, the company last year discussed with the European Union a proposal to allow competitors to organize ad sales directly on its video service.

In the year In 2021, the company agreed to give UK antitrust regulators effective veto power over elements of its plan to remove a technology called third-party cookies from its Chrome browser in order to resolve the investigation into the plan.

In France, Google agreed to pay a 220 million euro fine of about $239 million and to improve access to data for rival ad tech companies to use the data in a way that rivals could not reproduce to resolve a similar antitrust investigation. in the country.

Write to Miles Kruppa at miles.kruppa@wsj.com and Sam Schechner at Sam.Schechner@wsj.com

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