Justice Department Sues Google For Alleged Digital Advertising Monopoly

The Biden administration’s Justice Department and several state attorneys general filed suit against Google on Tuesday for allegedly monopolizing various digital advertising technologies.

The agency claimed Google monopolizes the tools that website publishers use to sell advertisements and that companies utilize to purchase advertisements. The civil antitrust suit, which follows another complaint issued by the Trump administration’s Justice Department three years ago related to the company’s alleged monopoly over search advertising, is backed by the attorneys general of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia.

“Today’s complaint alleges that Google has used anticompetitive, exclusionary, and unlawful conduct to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” Attorney General Merrick Garland said in a press release. “The Justice Department will vigorously enforce our antitrust laws to protect consumers, safeguard competition, and ensure economic fairness and opportunity for all.”

Shares for Alphabet fell nearly 2% on Tuesday; the company’s stock price has declined 25% over the past year, exceeding 9% decreases in the S&P 500 and 18% decreases in the technology-heavy NASDAQ Composite.

The Justice Department claimed that Google has engaged in a “pattern of acquisitions to obtain control over key digital advertising tools” and has manipulated advertising auctions to “deprive rivals of scale.” Such moves may violate the Sherman Act, which outlaws “monopolization, attempted monopolization, or conspiracy or combination to monopolize” deemed unreasonable by the court system.

“The complaint filed today alleges a pervasive and systemic pattern of misconduct through which Google sought to consolidate market power and stave off free-market competition,” Deputy Attorney General Lisa Monaco said in the release. “In pursuit of outsized profits, Google has caused great harm to online publishers and advertisers and American consumers.”

Google said in a statement that the Justice Department lawsuit attempts to “pick winners and losers” in the “highly competitive” advertising technology space. “It largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was recently dismissed by a federal court,” a spokesperson told multiple media outlets, contending that the Justice Department 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.”

Google accounted for some 29% of the total digital advertising revenue generated in the United States as of 2021, according to data from eMarketer. Meta and Amazon followed with 24% and 11% of advertising revenues respectively.

The news of the antitrust lawsuit comes as Google parent company Alphabet announces significant headcount reductions. Alphabet CEO Sundar Pichai informed staff members that roughly 12,000 positions would be eliminated as a result of macroeconomic turmoil and the need to manage costs, affecting roughly 6% of the company’s workforce of nearly 187,000.

The Children’s Investment Fund Management CEO Christopher Hohn called for Alphabet to reduce headcount by another 25,000 workers, referencing excessive median salaries surpassing $300,000 and rapid growth in payrolls. “I am encouraged to see that you are now taking some action to right size Alphabet’s cost base and understand that it is never an easy decision to let people go,” he told Pichai. “Ultimately management will need to go further.”

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