WASHINGTON (Reuters) – The U.S. Justice Department on Thursday sued Alphabet Inc’s Google for abusing its control over its digital advertising business and should force Google to sell its ad manager suite. said. The government’s latest jab to thwart Big Tech’s market power.
The lawsuit addresses Google’s business, which accounts for 80% of its revenue. The Justice Department has asked the court to force Google to divest its ad tech business.
“Google has used anti-competitive, exclusive, and unlawful means to eliminate or substantially reduce its threat to its control over digital advertising technology,” the antitrust complaint states.
In response to the lawsuit, Google said the government is “slowing down innovation, driving up advertising costs and multiplying the flawed arguments that make it difficult for thousands of small businesses and publishers to grow.”
The federal government should level the playing field with big tech companies such as Amazon.com (AMZN.O), Facebook owner Meta Platforms (META.O) and Apple (AAPL.O) It is said that
Tuesday’s lawsuit by the administration of Democratic President Joe Biden follows a 2020 antitrust lawsuit filed against Google during the presidency of Republican Donald Trump.
The 2020 lawsuit, which alleges antitrust violations in the way the company obtained or maintains exclusivity in online search, is set to go to trial in September.
Eight states, including Google’s home state of California, joined the department in Tuesday’s lawsuit.
Google shares fell 1.6% on Tuesday.
“Google has stifled meaningful competition and stifled innovation in the digital advertising industry,” the lawsuit said.
In addition to its well-known free search, Google makes money through its affiliated ad tech business. This is what connects advertisers with newspapers, websites and other companies looking to host them.
Advertisers and website publishers complain that Google lacks transparency about where their ad dollars go, specifically how much goes to publishers and how much goes to Google. .
The company made a series of acquisitions, including DoubleClick in 2008 and AdMob in 2009, which helped it become a dominant player in online advertising.
“Project Poirot”
While Google remains the market leader by a long shot, its share of U.S. digital ad revenue has fallen, falling from 36.7% in 2016 to 28.8% last year, according to Insider Intelligence.
The Justice Department has asked a jury to decide a lawsuit filed in the U.S. District Court for the Eastern District of Virginia.
The lawsuit highlights Google’s attempts to dominate the advertising market, with the government claiming the company has “technical tools to quell the threat.” The complaint referred to header bidding, a method that allows businesses to bypass Google and bid for ad space on his website.
It has a series of projects underway, including one called ‘Project Poirot’, named after Agatha Christie’s detective Hercule Poirot. The project was “designed to identify and effectively respond to ad exchanges that have adopted header bidding techniques.”
The 149-page complaint alleges that Google doubled down after Project Poirot successfully manipulated advertiser spending to reduce competition from rival ad exchanges. His rival AppNexus/Xandr loses him 31% of his DV360 advertiser spending, Rubicon loses 22%, OpenX his 42% and Pubmatic 26%, the complaint states.
Reporting by Diane Bartz and David Shepardson.Editing by Chris Sanders and Grant McCool
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