The US sued Google for monopolizing the digital advertising market

The U.S. Department of Justice and eight states have sued Google to split the search giant’s ad technology business over alleged illegal monopolization of the digital advertising market.

“The lawsuit we have filed today seeks to hold Google to account for what we allege are its longstanding monopolies in digital advertising technologies that content creators use to sell ads and advertisers use to buy ads on the open Internet,” said the Justice Department’s antitrust chief Jonathan Kanter.

In its blog, Google said that this lawsuit “seeks to determine winners and losers in the highly competitive ad technology sector.” The case “largely duplicates an unfounded lawsuit by Texas Attorney General. Much of this lawsuit was recently rejected by a federal court. The US Department of Justice is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.”

Alphabet shares continued their decline on the news, falling 2.6% to hit a session low. In 12 months, the company’s shares fell by 23%.

“No matter the industry and no matter the company, the Justice Department will vigorously enforce our antitrust laws,” Attorney General Merrick Garland said during the press conference.

The lawsuit is the first major case of the Biden administration challenging the power of one of the nation’s largest technology companies, continuing an investigation that began under former President Donald Trump. It’s also one of the few times the Department of Justice has called for a breakup of a major company since the collapse of Bell Telecom in the 1980s.

Google is the dominant player in the $278.6 billion U.S. digital advertising market, controlling most of the technology used to buy, sell and serve online ads. The US Department of Justice has said that Google’s dominance allows it to keep at least $0.30 of every dollar spent by advertisers through its online advertising tools. The resolution of the case may take years.

This lawsuit is the second antitrust lawsuit filed by the Department of Justice against Google and the fifth major case in the US challenging the company’s business practices. State attorneys general have filed three separate lawsuits against Google, alleging that the company dominates the markets for online search, ad technology and apps on the Android mobile platform in violation of antitrust laws.

Kanter, US Department of Justice antitrust chief, said during a press conference that Google had engaged in anti-competitive behavior for 15 years, including “a scheme of acquisitions to gain market dominance.”

These include the $3.1 billion acquisition of Internet advertising giant DoubleClick in 2007, which the Department of Justice is now trying to reverse, the 2010 deal to buy Invite Media for $81 million and the 2011 purchase of AdMeld for $400 million.

The Department of Justice is also seeking damages from Google for allegedly overcharging federal government agencies, such as the US military, that bought online advertising. The agency said the U.S. government has spent more than $100 million on online media advertising since 2019, but the complaint did not specify how much the Department of Justice wants to recover.

Google claims that the Internet advertising market is crowded and competitive. In court filings and congressional testimony, the company said its competitors include other big players in the ad tech market, such as Amazon, Meta Platforms and Microsoft.