Department of Justice’s Antitrust Division Sues Google (Again) for Monopolization of the Digital Advertising Market | The Volkov Law Group

In a significant lawsuit, the DOJ’s Antitrust Division filed a complex complaint against Google alleging a 15-year-old scheme to monopolize the digital advertising market. The DOJ was joined by the Attorneys General of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia.

The DOJ filed a separate antitrust case against Google in 2020 for monopolizing search and search advertising, which are separate markets from digital advertising technology markets. The Google search case is scheduled to be heard in September 2023.

According to the complaint, Google engaged in an elaborate acquisition strategy to secure market dominance and then employed a pattern of exclusionary behavior to expand and consolidate its monopoly position.

The DOJ filed its case in the Eastern District of Virginia, known as the “rocket registry” for expediting civil and criminal cases. The DOJ deliberately avoided filing a lawsuit in the US District Court for the District of Columbia, apparently to try to avoid delays in pursuing its case.

The DOJ complaint alleges that Google monopolizes key digital advertising technologies, dubbed the “ad tech stack,” that website publishers rely on to sell ads and advertisers rely on to buy ads and attract potential customers to reach. Website publishers rely on ad tech tools to generate revenue. Google controls: (i) the digital tool almost all major website publishers use to sell ads on their websites; (ii) the dominant tool for advertisers, helping millions of advertisers buy ad inventory; and the largest ad exchange, conducting real-time auctions to match buyers and sellers of online advertising.

According to the DOJ, Google has long held monopolies in digital advertising technologies, which content creators use to sell ads and advertisers use to buy ads across the web. The effect of Google’s illegal behavior has been to drive out competing competitors, reduce competition, increase advertising costs, reduce website publishers’ revenues and thwart innovation.

The DOJ cited five specific examples of Google’s exclusionary behavior: (1) onboarding content creators through tying agreements; (2) manipulate auctions, including gaining a first-look and last-look advantage over competing ad exchanges; (3) prevent industry participants from using competitors’ technologies and penalize those who attempt to do so; (4) collecting and misusing competitor bid data; and (5) depriving customers of choice by disparaging Google’s own services.

Google’s dominance of the digital advertising market has enabled Google to charge a premium on display advertising transactions, a multi-billion dollar market that involves instant auctions each year in the United States.

Google estimates that it retains an average of 30 cents from every advertising dollar that flows through Google’s ad tech tools.

Google’s own managers and employees observed their own dominance of the market in a number of examples cited by the Justice Department in which they: (i) characterized Google’s Ad Exchange as an “authoritarian broker”; (ii) stated that switching ad servers is a “nightmare” for publishers that “[t]is an act of God;’ (iii) described Google’s scheme of paying publishers ‘$3 billion annually’ by restricting access to Google Ads and ‘overcharging its advertisers’; (iv) the emphasis that “[o]Your goal should be all or nothing – benefit [Google’s ad exchange” or don’t get access to our [advertiser] requirement;” (and (v) details of the company’s steps to “drain out” competitors.