Google`s Lucrative Ad Tech Business Goes on Trial

The US government is targeting one of Google's primary sources of immense revenue: its highly profitable ad tech business. A trial commencing Monday will see the Department of Justice (DoJ) argue that Google's parent company, Alphabet, operates an illegal monopoly in the digital advertising market. In the past year, Alphabet generated over $200 billion (£152 billion) from advertising. The company maintains that its success is due to the "effectiveness" of its services. However, prosecutors claim that Google has used its market dominance to suppress competition and stifle innovation. Laura Phillips-Sawyer, a professor at the University of Georgia School of Law, emphasized the significance of the case: “It is a really important industry that grabs billions of consumer dollars every year. I think all consumers have an interest in this litigation.” This is Google's second major antitrust case in the US. In August, a judge deemed Google's dominance in search illegal, though the consequences for Google and Alphabet remain uncertain.

⚡ Anticompetition Claims: The 2023 lawsuit filed by the DoJ and a coalition of states accuses Google of monopolizing the digital ad marketplace and using its power to hinder competitors. Google argues that it is just one of many companies involved in digital advertising and points to growing competition from firms like Apple, Amazon, and TikTok as evidence of a dynamic market. The case will be heard by US District Judge Leonie Brinkema, who will decide the outcome. This trial follows a recent ruling by Judge Amit Mehta, who declared Google's practices in online search illegal. Mehta's ruling characterized Google as a monopolist maintaining its dominance through anti-competitive practices.

⚡ Make Up or Break Up: In the previous trial, Google defended its dominance in online search by asserting that its superior product drove its success. The company is expected to use a similar defense in the ad tech case, citing its 2023 blog post that claims no one is forced to use its advertising technologies—they choose them because they are effective. Judge Mehta is now focusing on determining remedies for Google's conduct, with expectations that these may involve adjustments to Google's business model rather than a complete breakup of the company. The complexity of ad tech could pose challenges for the DoJ in proving its case. Antitrust professor Rebecca Haw Allensworth from Vanderbilt University Law School noted that while the concept of search is familiar, advertising technology is so intricate that it may be difficult for the government to present a clear monopolization argument. ⚡ Global Scrutiny: The scrutiny of Google's ad tech extends beyond the US. On Friday, the UK Competition and Markets Authority announced its belief that Google has been abusing its dominance in the ad tech industry. Its initial findings suggest that Google’s potentially unlawful practices could be harming thousands of UK publishers and advertisers. Google, however, criticized the UK's decision as based on a "flawed" understanding of the ad tech sector. ⚡ Image Credit: GettyImages