Justice department alleges Google tried to ‘eliminate’ ad market rivals in lawsuit

The US justice department and eight states filed a lawsuit against Alphabet's Google on Tuesday over allegations that the company abused its dominance of the digital advertising business, according to a court document.

"Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies," the government said in its antitrust complaint.

The government alleges that Google's plan to assert dominance has been to "neutralize or eliminate" rivals through acquisitions and to force advertisers to use its products by making it difficult to use competitors' products.

The antitrust suit was filed in federal court in Alexandria, Virginia. Attorney general Merrick Garland said in a press conference Tuesday that Google's dominance in the ad market means fewer publishers are able to offer their products without charging subscription or other fees, because they can't rely on competition in the advertising market to keep ad prices low.

As a result of Google's dominance, he said, "website creators earn less and advertisers pay more".

The justice department asked the court to compel Google to divest its Google Ad manager suite, including its ad exchange AdX.

The department's suit accuses Google of unlawfully monopolizing the way ads are served online by excluding competitors. This includes its 2008 acquisition of DoubleClick, a dominant ad server, and subsequent rollout of technology that locks in the split-second bidding process for ads that get served on Web pages.

Google's ad manager lets large publishers who have significant direct sales manage their advertisements. The ad exchange, meanwhile, is a real-time marketplace to buy and sell online display ads.

The lawsuit demands that Google break off three different businesses from its core business of search, YouTube and other products such as Gmail: the buying and selling of ads and ownership of the exchange where that business is transacted.

Garland said that "for 15 years, Google has pursued a course of anti-competitive conduct" that has halted the rise of rival technologies and manipulated the mechanics of online ad auctions to force advertisers and publishers to use its tools.

In so doing, he added, "Google has engaged in exclusionary conduct" that has "severely weakened", if not destroyed competition in the ad tech industry.

Alphabet Inc., Google's parent company, said in a statement that the suit "doubles 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".

The lawsuit is the second federal antitrust complaint filed against Google, alleging violations of antitrust law in how the company acquires or maintains its dominance. The justice department lawsuit filed against Google in 2020 focuses on its monopoly in search and is scheduled to go to trial in September.

Eight states joined the department in the lawsuit filed on Tuesday, including Google's home state of California. The states taking part in the suit include California, Virginia, Connecticut, Colorado, New Jersey, New York, Rhode Island and Tennessee.

Dina Srinivasan, a Yale University fellow and adtech expert, said the lawsuit is "huge" because it aligns the entire nation - state and federal governments - in a bipartisan legal offensive against Google.

Google shares were down 1.3% on the news.

While Google remains the market leader by a long shot, its share of the US digital ad revenue has been eroding, falling to 28.8% last year from 36.7% in 2016, according to Insider Intelligence. Google's advertising business is responsible for about 80% of its revenue.