Google violated antitrust laws to monopolize online ad tech market: US court

A US federal court has ruled against Google in an antitrust lawsuit challenging the company's monopoly in the digital advertising technology markets. 

The court found that Google violated sections 1 and 2 of the Sherman Act by “willfully acquiring and maintaining a monopoly” in the ad server market and ad exchange market, which are used by publishers and advertisers to buy and sell online display ads. 

The court said it will announce “appropriate remedies” for Google’s violations at a separate hearing. 

The lawsuit, filed in January 2023 by the Justice Department and 8 US states, claimed that Google monopolized the online ad tech market by forcing advertisers and publishers to use its technology over that of its rivals. 

The court found that Google made its ad exchange (AdX) the only gateway through which AdWords (now Google Ads) advertising bid was allowed. An ad exchange is a marketplace that facilitates buying and selling of ad inventory between publishers and advertisers. 

This blocked rival ad exchanges from accessing the significant demand generated by AdWords advertisers, giving AdX a huge and unfair competitive advantage. 

Google’s ad server accounted for 87% of the US market and 91% of the global market, according to the lawsuit. 

Further, Google required publishers using its publisher ad server called DoubleClick for Publishers (DFP) to give AdX the opportunity to buy the publisher’s impression before any rival exchanges were allowed to bid for that impression. 

Website publishers use ad servers to organize, price, and deliver ads on their websites.  

The lawsuit claims that Google’s ad exchange controls 47% of the US market and 56% of the global market. Nine of the top ten websites in the US are using its services.

Publishers who didn’t want to use DFP were given the option to access AdX demand via AdX Direct. The lawsuit claims that this was an inferior product with higher latency. Also, it did not show the price offered by AdX, did not give access to real-time bids, and did not allow publishers to place bids from AdX into real-time auctions with bids from other exchanges.  

“We won half of this case and we will appeal the other half. Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective,” said Lee-Anne Mulholland, Google’s VP of regulatory affairs.

The Justice Department has sought a divestiture of Google’s publisher ad server (DFP) and ad exchange (AdX) products, which means it may have to sell it to another company. 

Google is already facing the risk of being forced to sell Chrome after a US federal court ruled last year that the tech company has illegally established a monopoly in online search by paying billions of dollars to smartphone, telecom and browser companies. 

Google acquired DFP in 2008 for $3.1 billion to tap into the growing display advertising market. In 2018, it was combined with  AdX, under a single brand called Google Ad Manager (GAM). 

Google’s monopoly in search, advertising and Android market has been under scrutiny in multiple countries including India. 

The company’s ad tech business practices are also being investigated by the European Commission and UK's Competition and Markets Authority (CMA).

In October 2022, India’s antitrust watchdog, Competition Commission of India (CCI), slapped Google with a fine of Rs 1,337 crore for abusing its dominant position in Android mobile device markets. 

Image credit: Wikimedia Commons