Antitrust case alleging Google illegally dominates digital advertising
This article is about the antitrust suit targeting Google's digital advertising practices. For the suit targeting Google's search engine practices, see United States v. Google LLC (2020). For other lawsuits, see United States v. Google.
United States, Commonwealth of Virginia, State of California, State of Colorado, State of Connecticut, State of New Jersey, State of New York, State of Rhode Island and State of Tennessee v. Google LLC
Filed in the U.S. District Court for the Eastern District of Virginia, the suit aims to force Google to sell off significant portions of adtech business and require the company to cease certain business practices.[3] The trial began on September 9, 2024 and concluded on September 27.[4] Closing arguments were delivered on November 25, 2024.[5]
Background
Growth of Google's adtech business
Beginning in the 2000s, Google gradually increased its presence in the adtech market, with the company acquiring DoubleClick, Invite Media, and AdMeld.[6] The acquisition of DoubleClick received criticism from privacy groups including the Electronic Privacy Information Center (EPIC), who petitioned the Federal Trade Commission (FTC) to scrutinize the deal.[7] The FTC ultimately approved the $3.1 billion acquisition of DoubleClick in December 2007.[8]
By 2021, Google's adtech division was the company's second largest business behind Google Search, generating approximately $31.7 billion in revenue for the company.[3] As of 2023, Google's advertising business generated an estimated 80% of the company's revenue.[9]
In August 2024, following a ruling by Judge Amit P. Mehta that Google monopolized the online search market, the Justice Department began considering remedies, including a potential breakup of Google’s business units like Chrome and Android, and other measures to curb Google’s dominance in AI products and online advertising. The DOJ is also contemplating enforcing measures that would prevent Google from maintaining exclusive contracts and might require the company to divest certain assets or share its data with competitors, particularly in the online search and advertising sectors.[11][12][13]
The ruling against Google is seen as a significant win for antitrust enforcement in the U.S., setting a precedent for how the government might tackle monopolistic practices in the tech industry. Analysts suggest that the potential remedies could have a profound impact on the digital advertising landscape and the broader tech ecosystem.[16]
Early proceedings (2023-2024)
Following the filing of the lawsuit, the DOJ claimed it has documentation that would bolster its case. This includes an alleged statement by a Google advertising executive who took issue with the company "owning the platform, the exchange and a huge network", who compared it to if Goldman Sachs or Citibank owned the New York Stock Exchange (NYSE).[3] In what has been described as an unconventional move for a federal antitrust lawsuit, the DOJ has pushed for a jury trial for the case.[17]
In March 2023, judge Leonie Brinkema denied Google's request to move the lawsuit from the District Court for the Eastern District of Virginia to a venue in New York, which is considered a more favorable venue for Google.[18] In March 2023, Google filed a motion to dismiss the case.[19] Brinkema denied this request in April 2023, who stated that the DOJ's initial complaint sufficiently detailed for the case to proceed.[6][20]
In August 2023, Google's pushed for the recusal of Assistant Attorney General Kanter from the case, arguing Kanter's past representation of Google's rivals in private practice meant he was unfairly biased against the company.[21] Brinkema denied Google's effort to force Kanter's recusal in September 2023, describing the company's bias claims as "essentially a red herring defense".[22]
In February 2024, it was announced that the case would begin trial on September 9, 2024.[23] Following a dispute between the DOJ and Google in the 2023 search trial regarding the release of public exhibits pertaining to the case, Brinkema urged both parties to resolve any similar dispute ahead of the 2024 trial.[24]
On April 26, 2024, Google filed a motion seeking summary judgement in the case. In the motion, Google accused the DOJ's of improperly calculating Google's share of the digital advertising market.[25]
On May 16, 2024, Google asked the court to strike the jury trial demand made by the DOJ, as they had compensated all U.S plaintiffs for the appropriate damages.[26] After hearing from both sides, the court ruled in favor of Google, ordering for the trial to take place before a magistrate judge instead of a jury.[27]
The trial began before Judge Brinkema on September 9, 2024, and was expected to last for several weeks.[4] When it began, the trial moved at a surprising pace and concluded in 3 weeks.[30]
Opening arguments
In opening arguments, lead DOJ attorney Julia Tarver Wood said that Google had used its acquisitions of ad software companies like DoubleClick and AdMeld to shore up an 87% market share in the ad-selling industry, stifling competition and hurting both consumers and publishers in the process.[31] Wood further claimed that Google locks customers into using their products and controls how transactions are made within the ad-tech market.[32][33]
Google's lead attorney Karen Dunn countered by saying that people use Google's products simply due to the fact that they are "simple, affordable, and effective,"[34] and that case was an assault on essential tools that publishers and advertisers relied on.[35]
Week 1
The first week of the trial largely focused on how Google's ad-tech products worked together to conduct behind-the-scenes "millisecond ad auctions."[36] After opening arguments, prosecutors called Gannett executive Tim Wolfe to the stand as their first witness.[37] Wolfe testified that companies like Gannett feel as if they have "no choice" but to use Google's products, despite them knowing that they are on the losing end of the deal.[34] Prosecutors then called former News Corp executive Stephanie Layser to the stand, who said that the company in 2017 estimated that they would have lost around $9 million by moving away from Google's ad-tech products, raising an appearance of captivity on Google's end.[38][39] On September 11, court documents were presented that showed former Google executive David Rosenblatt telling his colleagues in 2009 that the goal for Google's online advertising business was to "crush" the competition.[40] These documents were then corroborated by former DoubleClick executive Brad Bender,[40] with witnesses also adding that Google's 20% ad revenue fee was the "highest in the industry."[41]
Internal documents further showed that Google knew that publishers would "balk" when it implemented measures in 2019 to prevent the diverting of profits to rival competitors,[42] with the DOJ attempting to illustrate that Google had ignored the preferences of its customers to strengthen their own business position.[43] These measures, witnesses testified, involved unified pricing rules and header bidding, a term for the process in which publishers skirted around Google's ad exchange auctions.[44] Trial testimony and documents showed that for years, Google had given its ad exchange, AdX, preferential treatment when it came to matching a publisher's proposed floor price.[36] Professor Ramamoorthi Ravi of Carnegie Mellon University testified that rules imposed by Google "seem to have been designed to advantage Google's own products."[36] Prosecutors also called Brian Boland, a former Facebook ad chief, who testified that Facebook initially had planned to challenge Google in the industry, but pulled out and instead made a deal with them in 2018 due to their conclusion that they wouldn't be able to compete.[45]
Week 2
On September 10, prosecutors called YouTube CEO Neal Mohan to the stand. In his testimony, Mohan refuted allegations of monopolist behavior by Google, saying that the company had "plenty of competition."[46] As Mohan testified, prosecutors presented documents that illustrated how Google acquired rival companies, "parked" them away, and monopolized the market to push out competition.[47] Prosecutors also similarly called former Google executives Jonathan Bellack and Nirmal Jayaram to the stand, who both sought to disavow and contradict emails they wrote in the past.[30] Bellack, when confronted with an email he wrote comparing Google's ad-tech business to "if Goldman or Citibank owned the NYSE (New York Stock Exchange)," dismissed his email as "late-night ramblings."[30] Jed Dederick, Chief Revenue Officer of The Trade Desk, described Google's actions as "draconian" and "absolutist."[48]
Prosecutors also sought to show that Google deliberately destroyed damning evidence, a problem that was levied at Google's first antitrust trial.[49][50] Former Google executive Chris LaSala testified on September 20 that Google's chat messages had history off "by default" and that business executives often referred to conversations as "privileged and confidential."[49] The prosecution rested its case shortly thereafter, after which Google began to mount its defense.[51] Scott Sheffer, Google's first witness, said that the ad tech industry "has been exceptionally fluid" and that it was vastly more complex and competitive than what the DOJ had portrayed it to be.[52]
Week 3
Google continued its defense on September 23 by calling witnesses to help explain the value of the products that they offer.[53] Google executives testified that the company had helped consumers and competitors alike by attempting to fight off ad fraud and spam through the spending of millions of dollars. They further explained that if their unit were to be broken up, Google's ability to fight such issues would be compromised.[5][54] Per Bjorke, the director of product management at Google, testified that the company "can much more easily fight spam" with a large-scale ad platform.[54] Google also refuted allegations that they had "locked" advertisers and publishers into an "unfair system," countering by saying that competitors take higher rates from publishers than Google does and that they were helping to foster competition.[55] Adam Stewart, a Google vice president, explained that Google was actually "losing (market) share" to companies like Facebook and the Trade Desk.[5] Mark Israel, a Google expert, said that the government was "vastly underestimating" the competition that the company is facing.[56]
Google rested on September 27, after which the prosecution delivered a brief rebuttal.[5]
Closing arguments
Closing arguments were delivered on November 25. The DOJ concluded by stating that Google is "once, twice, three times a monopolist," with Google's lead lawyer Karen Dunn countering that the government had provided little evidence to back up their allegations and that Google's actions were one of "innovation in response to competition."[57][58] Judge Brinkema raised concerns about Google policies leading to the deliberate deletion of some internal communications, not indicating, though, on how she may rule.[59]
Reaction and analysis
Lawmakers from both parties, including Senators Amy Klobuchar (D-MN) and Josh Hawley (R-MO), spoke positively about the lawsuit.[60] Polling by YouGov in conjunction with The Economist found that Americans approved of the lawsuit by a 41% to 19% margin, with 40% stating they were "not sure".[61]
Google denied the DOJ's allegations, with a company spokesperson accusing the department of trying to unfairly "pick winners and losers in the highly competitive advertising technology sector."[62] The Chamber of Progress, a tech industry trade group whose membership includes Google, argued that the lawsuit is misguided amid a declining advertising market.[63]
Legal commentary
Commentators have argued that the basis of the DOJ's case is rooted in a relatively "traditional" interpretation of antitrust law, as opposed to more "novel" theories of anti-competitive harms associated with the New Brandeis movement.[64] The editorial board of The Washington Post praised the lawsuit as "good, old-fashioned antitrust enforcement" in a February 2023 article.[65]
William Kovacic, a former Republican member of the FTC, has argued that the suit is a serious one that "adds another important complication to Google's efforts to deal with regulators worldwide."[3]Douglas Melamed, who served in the DOJ Antitrust Division during the Clinton Administration, argued that the DOJ "would get a remedy that's going to shake up the market" if able to prove their claim in court. However, Melamed cautioned observers from assuming that the DOJ would win the case.[66]
Analysis of jury trial request
Commentary surrounding the DOJ's request for a jury trial in the lawsuit has often described the decision as unusually and potentially risky. A January 2023 article in Bloomberg News suggested that the "surprising request" was made due to DOJ concerns about a hostile judicial environment.[17] According to Harry First of the New York University School of Law, the DOJ's effort to "seek damages and demand a jury trial in a monopolization case is unprecedented".[67]
Related lawsuits
According to The New York Times, the lawsuit is the fifth antitrust suit filed against Google by either the federal government or states attorney general since 2020.[3] The DOJ filed a separate antitrust case in October 2020 accusing Google of unlawfully monopolizing the search market.[68] Google's dominant position in the adtech market has additionally received legal scrutiny in both the European Union and the United Kingdom.[69]
State of Texas v. Google, LLC (2020)
The case has been compared to a separate, state-led antitrust lawsuit targeting Google's adtech practices filed in 2020.[25][70] The aforementioned lawsuit, led by the Texas Attorney General's office, accuses Google of unlawfully abusing its dominance in digital advertising.[71]
In April 2024, the DOJ requested to file a statement of interest in the case during the discovery process.[72] The State of Texas v. Google, LLC is expected to go to trial in Plano, Texas on March 31, 2025 before judge Sean D. Jordan, and will be held over a four week period.[73]
^Bartz, Diane; Shepardson, David (January 24, 2023). "U.S. targets Google's online ad business monopoly in latest Big Tech lawsuit". Reuters. Retrieved April 28, 2024. Google, whose advertising business is responsible for about 80% of its revenue, said the government was "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.
^Montoya, Karina (February 26, 2024). "The Countdown to the Google Ad Tech Trial Is On: Here's What You Need to Know". Tech Policy Press. Retrieved April 28, 2024. During the conference, which set the scene for what to expect before and during the trial, Judge Brinkema urged the Department of Justice (DOJ) and Google to solve any disputes about posting exhibits for the public record ahead of time, after acknowledging that disagreements over this matter in the Google Search case delayed both the trial and access to public records. "I do not want to see this same problem happen [...] This trial will not stop to resolve this [matter]," she said.
^Morrison, Sara (January 24, 2023). "Google's bad year is getting worse". Vox. Retrieved April 4, 2023. The Chamber of Progress, a Google-funded Big Tech advocacy group, said in a statement that the case was "disconnected from economic reality" and that Google's digital ad market share (estimated to be about 29 percent in 2022, giving it the largest share of any one company) was "at an all-time low.
^Marfin, Catherine (April 24, 2024). "DOJ Wants To Weigh In On Texas Google Ad Tech Discovery". Law360. Retrieved April 28, 2024. The U.S. Department of Justice asked a federal judge Wednesday for permission to file a statement of interest in a Texas-led lawsuit accusing Google of anticompetitive conduct in the display advertising market, writing that the states' request for certain discovery items may violate an order in a substantially similar suit the DOJ is pursuing in Virginia.
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