A month after losing the largest antitrust case in the United States in over 20 years involving its search business, Google faces another antitrust lawsuit threat in the digital advertising field.
On Monday, September 9th, Eastern Time, the U.S. Northern Virginia Federal Court began hearing the second antitrust case against Google, with Judge Leonie Brinkema hearing opening statements from the plaintiff, the U.S. Department of Justice. The Department of Justice accuses Google of illegally controlling the software market for buying and selling digital advertising, known as ad tech, in an attempt to force Google to divest its Ad Manager product. It has been pointed out by the media that this case focuses on a $31 billion segment of Google's advertising business, which matches website publishers with advertisers, and the ad tech stack determines which banner ads appear on many websites on the internet.
On Monday, the Department of Justice stated that Google used acquisitions of companies like DoubleClick and AdMeld to early on eliminate threats to its advertising business, leading to conflicts arising from Google's control of various technologies in the ad tech stack, encouraging Google to engage in self-dealing. The lawsuit even lists the U.S. Army as one of the advertisers harmed by Google's monopolistic behavior. The complaint states that the U.S. government has spent $100 million on internet advertising since 2019.
As the first witness for the Department of Justice, Tim Wolfe, the revenue chief of media company Gannett, testified in court on Monday that out of the $15 million that USA Today pays annually to ad tech companies, around $10 million flows to Google, accounting for about one-third of such ad tech expenditures.
Gannett stated that publishers rely on Google's ad tools, and whether they are good or bad, there are no good alternatives, making it a &#34;tough task&#34; to break away from Google.
Representing the Department of Justice, lawyer Julia Tarver Wood told the judge,
<blockquote>
&#34;Google is not in the defendant's seat today because of its size, but because 'they use size to suppress competitors.' 'Google's behavior is entirely typical of a monopoly.'&#34;
</blockquote>
Wood referred to Google's publisher ad server business, ad exchange platform AdX, and ad network for advertisers as a &#34;triple monopoly,&#34; stating &#34;one monopoly is bad enough, but we are facing a triple monopoly.&#34; Wood also mentioned that Google holds at least half of the market share in each business line, with some measures showing a share as high as 91%. &#34;The rules are set up to point all roads to Google.&#34;
Google responded on Monday, stating that the U.S. government's actions against Google will lead to &#34;absurd results&#34; and do not reflect the current state of internet advertising. In court filings, Google argued that the Department of Justice's lawsuit overly focuses on website advertising.
Google also accused the Department of Justice of exaggerating Google's market share, which does not include competitors like Amazon, Meta, Microsoft, and TikTok. If competition from other sources is taken into account, Google's share of the advertising market would halve from 34% to 17%. Google stated that advertisers can choose to use Google or competitors' tools, and can even shift ad spending from websites to other formats and platforms that do not involve Google's ad tech, such as Instagram or Netflix
Google's external counsel Karen Dunn warned that if Google is ordered to split up, it will only benefit other tech giants.
The case is expected to last for four weeks, and it is currently uncertain what specific penalties Google may face if the judge ultimately agrees with the U.S. Department of Justice's charges. If Google is forced to split its advertising technology business, it could cause a reshuffle in the digital advertising industry.
Wall Street News mentioned earlier this week that the focus of this case is Google's advertising tools, which are a crucial part of Google's $200 billion digital advertising business. These tools allow ad buyers to easily purchase ad space and enable ad sellers, such as website owners, to sell their ad space. If the Department of Justice wins the case, they will seek to at least split Google's ad management suite (GAM), and Google may also face a large number of compensation lawsuits from advertisers.
According to Morgan Stanley, in the face of Google's monopoly in internet search and advertising, the U.S. Department of Justice is mainly focused on addressing 3 issues: competition intensity, data scale advantage, and anti-competitive pricing. The Department of Justice is more likely to seek further correction of Google's data advantage and anti-competitive pricing, encourage competitors to invest in the internet search field, such as by canceling exclusive terms in Responsive Search Ads (RSA), allowing users to make screen selections, permitting access to Google's &#34;click/query/user&#34; data, and controlling ad bidding pricing.
On the day the case opened for trial, Google's parent company Alphabet's stock price opened high and then fell, rising over 1.6% in early trading before turning lower in the morning session. At midday, it hit a new daily low, dropping nearly 2.6% intraday, and ultimately closing down over 1.3%, marking a two-day decline to the lowest closing level since March 21.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/71124ebe-484a-431a-9055-62b134df1483.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/71124ebe-484a-431a-9055-62b134df1483.jpeg"/>

GOOGL

BYTED

AMZN

GOOG

Google argued that the U.S. Department of Justice's lawsuit focused too narrowly on website advertising, exaggerating Google's market share without taking into account competitors such as Amazon, Meta, Microsoft, and TikTok; its lawyers warned that if Google were to be split up, it would only benefit other tech giants

- Google faces another antitrust lawsuit in the digital advertising sector following its recent defeat in the largest antitrust case in over two decades, raising concerns about its control over the ad tech market.
- The U.S. Department of Justice accuses Google of illegally dominating the software market for buying and selling digital ads, focusing on a $31 billion segment of its ad business, potentially leading to significant repercussions in the internet advertising industry.
- Allegations include Google's control over ad technology, with the trial expected to last four weeks, potentially resulting in penalties or a forced breakup of its ad tech business, impacting the digital advertising landscape.

Wallstreetcn

Alphabet

ByteDance

Amazon

Alphabet - C

Google's second antitrust case opens, accused by the Department of Justice of monopolizing the advertising technology market up to 91%, even harming the U.S. Army