The action poses a significant financial threat to the company, which has been slashing jobs during a pullback in advertising. The suit seeks to force Google to sell off much of its advertising technology products, which enable the buying, selling and placement of ads across Google Search, YouTube and millions of other websites. The company’s advertising “network” brought in $7.9 billion for the company in the third quarter of 2022, about the same as all of Google’s revenue from YouTube.
The lawsuit marks the Justice Department’s first antitrust suit against a tech giant during the Biden administration, as a growing push to rein in the power of tech giants flounders. President Biden’s decision to tap industry critics as top antitrust enforcers was widely viewed as the dawn of a Washington reckoning for Big Tech, but the last Congress did not pass new laws reining in Silicon Valley’s power. Antitrust cases also take years to move through the courts, setting up a race against the clock for the administration.
Justice Department officials described this “historic” lawsuit as reflective of their overall strategy to more aggressively enforce the country’s antitrust laws. Associate Attorney General Vanita Gupta said that the Google lawsuit was filed in pursuit of “economic justice” and that the company’s digital advertising practices gobbled up publishers’ revenue for its own profit.
“Those actions have weakened the free and open internet and increased advertising costs for businesses and for the United States government, including for our military,” Gupta said.
Eight state attorneys general, who are taking up an increasingly prominent role in tech regulation, also joined the Justice Department’s lawsuit.
The suit alleges that Google engaged in a “systematic campaign” to gain a grip on the high-tech tools that publishers, advertisers and brokers use to buy and sell digital advertising.
“Having inserted itself into all aspects of the digital advertising marketplace, Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” the lawsuit says.
Google has used its control over the ad market to harm its rivals, resulting in a “broken” advertising market where website creators earn less and advertisers pay more, the Justice Department says. This also affects consumers because when publishers make less money from advertising, they have to charge people through subscriptions, paywalls and other forms of monetization, the lawsuit claims.
The suit adds to Google’s mounting legal challenges; the company is already fending off a separate federal antitrust lawsuit that was filed in the fall of 2020 during the Trump administration. That suit is scheduled to go to trial this year and alleges that aspects of Google’s contracts with other companies are exclusionary and serve to reinforce the company’s dominance at the expense of its rivals. Google also faces multiple antitrust lawsuits led by state attorneys general.
The federal government has been investigating alleged monopoly behavior by Google and other tech giants for years as the industry amassed more power and influence. A sweeping 16-month investigation conducted by the House’s top antitrust panel concluded in 2020 that Amazon, Apple, Facebook and Google engaged in anticompetitive, monopoly-style tactics to become leading tech giants. (Amazon founder Jeff Bezos owns The Washington Post.)
In a blog post, Google’s vice president of global ads, Dan Taylor, accused the Justice Department of attempting “to pick winners and losers in the highly competitive advertising technology sector” and took aim at the Biden administration for bringing the suit during broader economic uncertainty.
“Antitrust cases shouldn’t penalize companies that offer popular, efficient services, particularly in difficult economic times,” Taylor wrote. “And they shouldn’t force companies to reverse 15-year-old investments that they have nurtured and worked hard to make successful, especially when those investments were already reviewed by regulators and allowed to proceed.”
Google has long contended that it is simply one of many players in a hypercompetitive market. Advertising technology does have a dizzying number of competing companies, all fighting over different parts of the complicated transactions necessary to keep the digital ad ecosystem working. But Google competes at more levels of that system than any other company, and competitors have accused it for years of bundling together its products or giving incentives for customers to use multiple Google tools at the expense of other companies.
Google has said customers are free to use other products if they want. Yet the complaint seeks to use comments from Google’s own employees to show the opposite. It quoted one of the company’s digital advertising executives questioning the company’s grip over the ad industry.
“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,” the executive said, according to the complaint.
The complaint also includes a quote from a Google executive saying switching ad publishing tools “is a nightmare” for advertisers that “takes an act of God.” Another Google manager said the company’s goal should be “all or nothing — use [Google’s ad exchange] or don’t get access to our [advertiser] demand.”
Biden has signaled his intention to take on Big Tech’s power, in part by appointing tech critics Lina Khan as head of the Federal Trade Commission as well as Jonathan Kanter as chief of the Justice Department’s antitrust division. Under Khan, the FTC has been increasingly active in challenging mergers in the tech industry. The agency last month brought a challenge against Microsoft’s acquisition of game developer Activision, and it also argued in a California courtroom against Meta’s acquisition of a virtual reality start-up.
The Justice Department, under Attorney General Merrick Garland, had several antitrust losses in its first years but more recently has notched a string of high-profile victories, including a court ruling that blocked the merger of two powerhouse book publishers.
Yet antitrust enforcers continue to face an uphill battle in a court system that has taken an increasingly narrow view of competition law.
Herbert Hovenkamp, an antitrust professor at the University of Pennsylvania Law School, said it’s possible that Google would eventually have to divest some of its business, but he noted that it hasn’t always been easy for the government to get courts to order divestitures.
“There’s a lot of head winds here, including a fairly conservative judiciary, so we’ll just have to see what happens,” he said.
De Vynck reported from San Francisco. Naomi Nix contributed to this report.