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The Justice Department alleges that Google tried to “eliminate” its ad market rival in the lawsuit.Google

The U.S. Department of Justice and eight states filed a lawsuit against Alphabet’s Google on Tuesday, alleging that the company abused its control over its digital advertising business, according to court documents.

“Google has used anti-competitive, exclusive and unlawful means to eliminate or significantly reduce threats to its control over digital advertising technology,” the government said in its antitrust complaint.

The government claims control Google’s plan is to “neutralize or eliminate” rivals through acquisitions and force advertisers to use their products by making it difficult to use competitors’ products. It is part of a slow, albeit new, move by the United States to curb the tech giants that have enjoyed nearly unrestricted growth for the past 15 years.

The antitrust lawsuit was filed in federal court in Alexandria, Virginia. “For his 15 years, Google has pursued anti-competitive conduct,” Attorney General Merrick Garland said at a news conference on Tuesday, stating that he would thwart the rise of rival technologies and manipulate the mechanics of online ad auctions. and use its tools for advertisers and publishers.

In doing so, he added, “Google engaged in exclusionary conduct” that “significantly undermines, if not destroys,” competition in the ad tech industry.

“First, Google controls the technology that nearly every major website publisher uses to offer ad space for sale. And thirdly, Google controls the largest ad exchange that matches publishers and advertisers every time ad space is sold,” Garland says. says.

As a result, “website creators earn less and advertisers pay more,” he added. This means fewer publishers will be able to supplement their revenue by offering content without subscriptions, paywalls or other fees.

The Justice Department has asked the court to force Google to sell its Google Ad Manager suite, which includes ad exchange AdX.

The agency’s lawsuit accuses Google of unlawfully monopolizing the way ads are delivered online by excluding competitors. This includes acquiring the dominant ad server, DoubleClick, in 2008 and subsequently deploying technology to momentarily lock the bidding process for ads served on web pages.

Google’s Ad Manager allows large publishers with many direct sales to manage their ads. Ad exchanges, on the other hand, are real-time marketplaces for buying and selling online display advertising.

Digital advertising now accounts for about 80% of Google’s revenue, supporting other initiatives that are generally less profitable. However, like Facebook’s parent company Meta, the company has seen its market share decline in recent years as smaller rivals took over the majority of the online advertising market. Moreover, the overall online advertising environment market is cooling as advertisers restrain their spending and prepare for a potential recession.

Alphabet, the parent company of Google, said: in a statement The lawsuit “slows innovation, drives up advertising costs, and doubles down on flawed arguments that make growth difficult for thousands of small businesses and publishers.”

This lawsuit is the second federal antitrust allegation against Google, alleging that the way Google obtained or maintained its exclusivity rights violated antitrust laws. A Justice Department lawsuit filed against Google in 2020 focuses on the company’s monopoly in search and is set for trial in September.

Eight states, including Google’s home state of California, joined the department in a lawsuit filed Tuesday. States participating in the lawsuit include California, Virginia, Connecticut, Colorado, New Jersey, New York, Rhode Island and Tennessee.

Yale Fellow and ad tech expert Dina Srinivasan said the lawsuit was “huge.” That’s because the lawsuit unites the entire country, including state and federal governments, in a bipartisan legal attack on Google.

Tuesday’s lawsuit comes as the U.S. government increasingly seeks to curb the control of big tech, but such legal action could take years to complete, and Congress said the tech It has not passed recent legislation that seeks to curb the influence of the industry’s biggest players.

The European Union is more aggressive. It launched an antitrust investigation into Google’s dominance of digital advertising in 2021. UK and European regulators are investigating whether the agreement between Google and Meta for online display advertising services violates rules on fair competition. I am also investigating.

According to Srinivasan, the current online advertising market is “broken and completely inefficient.” The fact that a middleman gets his 30-50% of each ad deal is “a lunatic inefficiency baked into the U.S. economy.” She calls it “free internet and huge taxes on consumers as a whole. It also directly affects the viability of the free press.”

Google’s stock fell 1.3% on the news.

According to research firm Insider Intelligence, in 2022 Google held nearly 29% of the U.S. digital advertising market (which includes all ads displayed on computers, phones, tablets and other internet-connected devices). Facebook’s parent company Meta is his number two, with nearly 20% of his share of the market. Amazon grew by over 11%, making him the third fastest growing segment.

Insider Intelligence expects both Google and Meta’s share of the advertising market to fall while rivals such as Amazon and TikTok rise.

https://www.theguardian.com/technology/2023/jan/24/justice-department-lawsuit-google-antitrust-law-advertising The Justice Department alleges that Google tried to “eliminate” its ad market rival in the lawsuit.Google

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