The US government is going after Google and its extremely profitable ad tech operations which is a key element in making Google so rich. This week the Department of Justice (DoJ) starts a crucial trial where they accuse Alphabet, Google's parent company of running an unlawful monopoly within the digital advertising market.
Since the tech giant earned over $200 billion in 2023 through advertisement, this case could attract serious consequences for the tech company.
Google Faces Monopoly Allegations in the Digital Ad Market
Alphabet, the company behind Google has primarily generated its wealth through digital advertising, displaying the ads that are retrieved by internet users across the globe.
While on its side the company pointed to the 'effectiveness' of its services, the prosecutors say this puts a stop to competitiveness and innovation. Such a legal proceeding is not for Google alone, and it has to do with an entire sector that sanctions billions of consumer dollars every year, according to BBC.
Laura Phillips-Sawyer an associate professor at the University of Georgia School of Law added to the popularity and importance of this case noting that all consumers are interested in this litigation.
She said Google is currently in its second antitrust legal battle in the US after another ruling in August that deemed the company's dominance on search as unlawful.
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The antitrust case brought against Google was initiated by the Department of Justice and was joined by a number of states in 2023; the claim submitted is that Google dominates the relevant market of digital ads. It alleges Google of leveraging its dominance in relevant markets to crowd out its competitors and restrain innovation.
In response, Google attempts to argue that Google is just a 'player' in this market more often than not. Alphabet suggested that competition is broadening arguing that the world's largest advertisers, Apple, Amazon, TikTok, and others, are increasing their advertising revenues.
In this procedure, both sides of the case, prosecution and defense, will make presentations before the US District Judge Leonie Brinkema, who will then make the final decision. The trial comes after another antitrust case in which Judge Amit Mehta said Google had violated the law by stifling competition in its search and general services.
Mehta said Google is a monopolist and it has been behaving like one to ensure that it retains its monopoly it defended its dominance in online search arguing that it provides better services. The ad tech case also seems to be the company employing the same defense strategy. Google has argued that its advertising technologies work, and nobody has to be forced to patronize them.
As Google has explained in a 2023 blog post, "Nobody is compelled to advertise using Google's products and services; the company gets preferred from choosing them because they work. "
As for now, Judge Mehta is in fact determining potential remedies for Google's anti-competitive behavior in the sphere of search business, while Judge Brinkema has a different ordeal. A potential problem for the government would be advertising technology which is so intricate, it is impossible to label the market as one company monopolizing.
"Advertising technology is so complex that I think that's going to be a real challenge for the government to make a clear, simple monopolization argument here," Rebecca Haw Allensworth, an antitrust professor at Vanderbilt University Law School said.
International Scrutiny on Google's Ad Tech Practices
Regulation on Google's Ad Tech Strategies or the European and the Global Concerns Similar to the States, other countries are also intensifying their focus on Google's Ad Tech.
It should be noted that last week, Google was also alerted by UK watchdog CMA that its lucrative advertising business may damage British publishers and advertisers.
This investigation by the CMA indicates that Google has been involved in anti-competitive conduct hence creating an unfair competition for other players, per Fox News.
Instead, a Google spokesperson responded to the CMA's report saying that the regulator has a 'fundamentally flawed' understanding of the ad tech sector and Alphabet is preparing to dispute it.
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