Google's $200 Billion AdTech Business Has A Monopoly Challenge

The US government has taken Google to court in a lawsuit which puts the focus on Google's extremely lucrative advertising business.

The case for the prosecution is that Google has used its market power to suppress rivals in enormous AdTech online adversing business, which Google has largely created since it began in 1998.

The case is being followed closely by  major news organisations, who have seen their ability to generate advertising revenue to fund their editorial output slashed as a result of the efficient consumer targeting that AdTech enables. Many of them are unhappy that they now pay Google a percentage of revenue for brokering their website adverts, while Google’s rivals in this sector, Meta and Amazon, also stand to gain if Google loses the case.

The company earned over $200 Billion (£152bn) in 2023 through the placing and selling of ads seen by Internet users and its parent company, Alphabet, has argued that its success is due to the "effectiveness" of its services, but prosecutors say it has used its market dominance to stifle rivals.

This trial comes following a landmark decision in a different monopoly case brought by the Justice Department against Google in which Judge Amit Mehta ruled that Google acted illegally to suppress competition in its online search business. Judge Mehta ruled that its search dominance was illegal, although what penalties Google and its parent comonay Alphabet will face as a result of that decision are as yet unclear.

In the current case is being brought by the US Dept. of Justice and some US States who assert that Google dominates the AdTech marketplace and has used near-monopoly power to frustrate competition.

Google argues it is just one of several hundred companies that facilitate the placement of digital ads in front of consumers. It argues that competition in the digital ad space is growing, not contracting - pointing to the increased ad growth and revenues for companies such as Apple, Amazon and TikTok as proof.  A Google representative said the case is based on a "flawed" understanding of the AdTech sector.

Both sides will present their cases to US District Judge Leonie Brinkema, who is expected to rule on the case before the end of the year. 

During last year's trial, Google said it dominated online search because it had a better product, although the US is not the only country where regulators are unhappy with Google's AdTech business. In Britain, the UK Competition and Markets Authority (CMA) has said it believes Google has been abusing its dominance in the online advertising  industry.

The CMA  found that Google used anti-competitive practices to dominate the market for online advertising technology, and that the potentially unlawful behaviour could be harming thousands of UK publishers and advertisers.

Google   |    CMA   |  Washington Post   |  BBC   |   Tribune   |     CNN   |    CityAM   |    Outlook Business   |

Digiday   

Image: pawel_czerwinski

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