January 25, 2023 | 6 min read
Abby Long is the Senior Managing Editor at PMG.
The U.S. Department of Justice (DOJ) and eight states jointly filed a new antitrust complaint against Google this week, accusing the company of monopolizing the digital advertising market. Spanning nearly 140 pages, the extensive complaint argues that Google engages in anticompetitive behavior and calls for the break up of Google’s ad tech business, marking the latest in a series of legal actions taken against the company as regulators scrutinize market leaders across the digital ecosystem.
We took a closer look at the key elements of the complaint in greater detail, Google’s response, and what advertisers can expect as the legal process unfolds.
The complaint asserts at length that competition in ad tech is “broken,” with allegations that Google engages in “anticompetitive, exclusionary, and unlawful means” in violation of the Sherman Act.
To set the stage for these claims, much of the complaint is devoted to an in-depth examination of the display advertising industry and chronicling the growth and evolution of Google’s ad products through the years. One of the “most explosive claims,” according to analysts, is new insight into Project Poirot, a special project led by Google’s product and engineering teams that, regulators say, was meant to reduce price competition, deny scale, and stall competitor growth of header bidding, leading to the growth of Google’s Open Bidding.
“Ad tech is broken. — U.S. Department of Justice”
One of the core arguments is that Google’s “interrelated and interdependent actions,” such as its acquisition of DoubleClick in 2008, have “cumulative and synergistic effects” that fortify Google’s dominance, impede innovation, and negatively impact the competitive process in the ad industry. In other words, the interconnected nature of Google products powers a flywheel that allegedly distorts competition and exercises unlawful monopolistic power.
The DOJ claims that Google has engaged in anticompetitive conduct over the years to better entrench its market power by:
Acquiring competitors to secure competitive advantages across key digital advertising systems.
Restricting advertiser demand to Google’s ad exchange and “conditioning effective real-time access to its ad exchange on the use of its publisher ad server.”
Limiting real-time bidding on publisher inventory on Google’s ad exchange and impeding competitors with distorted auction competition parameters.
Manipulating auction mechanics across products to protect Google’s market share and “deprive rivals of scale.”
As a result, Google now benefits from sizable market power across several parts of the ad ecosystem, including the ad network market and the publisher ad server market, and has attempted to monopolize the ad exchange market as well.
As a remedy, the U.S. government calls for Google to divest its ad tech stack, known as the Google Ad Manager suite, including the unwinding of its 2008 DoubleClick and 2011 Admeld acquisitions.
Google immediately responded to the news of the DOJ’s new antitrust complaint, sharing in a blog post that it “largely duplicates unfounded claims” that a federal court has already dismissed from another complaint. The U.S. government, from Google’s perspective, is “doubling down on a flawed argument” and mischaracterizes Google’s ad business in the process.
Google published a detailed reply countering the DOJ’s claims, stating that the complaint would slow innovation, raise advertising fees, and make it difficult for publishers to grow. Google also fact-checked the complaint, pointing to inconsistencies, false claims, and other mischaracterizations. Google argues that:
The DOJ lawsuit attempts to “rewrite history” and reverse investments. Both acquisitions of DoubleClick and Admeld were reviewed and cleared by regulators, and in the years since, Google has invested billions of dollars to improve these services for publishers, advertisers, and consumers.
Competition is increasing across the digital ecosystem, according to Google, with the search giant being just “one of hundreds” of advertising companies that enable ad placement across the open web and power ad tech platforms.
The lengthy explanations in the complaint on how Google’s ad tech works and evolved are misconstrued, as no one is “forced to use” Google’s technology like the complaint suggests. Similarly, the DOJ alleges that publishers are required to use Google’s ad server in order to access the Google ad exchange. “This is simply untrue,” says Google, as “publishers can and do use [Google’s] ad exchange with a different ad server.”
The complaint also claims that Google has prevented rivals from using header bidding via Google’s Open Bidding program, but “the facts don’t support that.”
Read Google’s full response here.
“Competition is increasing across the digital ecosystem with Google being just one of the hundreds of advertising companies to choose from.”
Google reinforced its commitment to supporting antitrust enforcement, though it disagreed with the DOJ about Google’s role in anticompetitive behavior within the advertising ecosystem. If acted upon, this complaint would make it “harder for Google to offer efficient advertising tools that benefit publishers, advertisers, and the wider U.S. economy,” as the company has spent years building ad tech and investing billions to support the open web.
In the context of the broader antitrust sweep against Big Tech companies, this complaint marks the fifth major case in the U.S. to challenge Google’s business practices and market positioning. Specifically, three separate complaints have been brought against Google by state attorney generals, alleging antitrust violations in relation to Google’s search advertising business, ad tech stack, and its Android app platform.
The DOJ complaint was years in the making and the first levied by the Biden administration against Google, building upon the work done by regulators under the prior administration.
While it can take years for antitrust complaints to wind through the legal process, analysts are calling this DOJ complaint the U.S. government’s “most significant case” against Google. After years of congressional hearings and regulatory investigations, the 139-page complaint presented a more advanced understanding of the overall digital ad business, articulating a level of detail not seen in many of the prior antitrust complaints against Big Tech companies.
It’s too soon to tell how this complaint will unfold as the legal process gets underway, though it’s important to keep in mind that any changes to Google’s platforms will take years to take effect.
“The DOJ complaint makes bold claims about Google’s ad business that will take some time for the legal system to work through, as allegations are separated from what we know to be true about Google’s ad products,” said Carly Carson, head of integrated media at PMG. “As initiatives like the push for more sustainable media and privacy-first advertising come into greater focus, regulatory action is just one of the many forces that stand to impact Google, and the larger digital advertising ecosystem, in the years to come.”
PMG will continue to work closely with our partners at Google and other platforms to understand the impact of any regulatory action, ensuring our customers are best positioned for any changes and kept informed as regulatory action and similar situations develop further.