One month after a US court ruled Google had illegally maintained its monopoly on internet search, the tech giant will this week face the start of yet another important antitrust case.
This new case is focused on Google’s online advertising business, which last year brought in more than US$200 billion. The US Department of Justice, along with 17 states, claims Google’s parent company, Alphabet, has monopolised multiple digital advertising technology products by neutralising or eliminating its competitors. The department says this “has caused great harm to online publishers and advertisers and American consumers.”
Google has denied this claim. In a statement published when the lawsuit was filed late last year, it said:
No one is forced to use our advertising technologies – they choose to use them because they’re effective.
Over the past decade, the European Union has successfully proved in a number of cases that digital platforms including Google have acted anticompetitively. This case further shows the US is also more willing to take on Google and other tech giants. And depending on what happens over the course of the trial, it could have enormous ramifications for big tech – and, by extension, the entire internet.
What is this case about?
Because the trial is only just beginning, many aspects of the case are not yet known.
However, from court documents that have already been made public, we know the US Department of Justice is accusing Google of creating an anticompetitive monopoly over the online advertising markets. It says the tech giant has done this through long-running practices such as acquiring competitors and forcing website publishers to adopt Google’s tools.
These practices have led to the full vertical integration of Google in the online advertising industry. Google has effectively been acting as “buyer, seller, and auctioneer of digital display advertising.”
Assistant Attorney General Jonathan Kanter says this has had – and continues to have – the effect of:
driving out rivals, diminishing competition, inflating advertising costs, reducing revenues for news publishers and content creators, snuffing out innovation, and harming the exchange of information and ideas in the public sphere.
The Department of Justice’s success will depend on proving its claims about the nature of online advertising markets and Google’s significant power over them.
The most difficult part for prosecutors will be persuading the court that Google has monopolised these markets by unlawfully excluding its rivals from competition.
The US is finally catching up to the EU
Historically, the European Union has been a leader when it comes to taking up the legal fight against big tech.
More than 20 years ago, the European Commission successfully prosecuted Microsoft for violating competition law. This was followed by other successful anticompetition law cases. For example, in 2017, the commission fined Google more than €2.4 billion for abusing its dominant position as a search engine.
The US now appears to be finally catching up with what has been happening on the other side of the Atlantic. Last month the US District Court ruled Google had an illegal monopoly on online search.
This marked the first time US prosecutors had successfully launched an anticompetition case against a digital platform such as Google. However, the case is not yet over: Google is currently planning an appeal.
But these two cases against Google are not the only ones US authorities are pursuing against big tech.
Recently, the US Department of Justice and the Federal Trade Commission have brought other lawsuits against Apple, Amazon and Meta.
An extremely important development
The “ad tech” case against Google and other cases against big digital platforms are extremely important for the future development of US antitrust law in the digital economy.
They will determine whether competitiveness will be restored in the digital markets or whether the monopolisation will continue to flourish. Either way, this will have significant implications for innovation, technological development and prices.
If this new case against Google is ultimately successful, it will make digital advertising markets more competitive. Google will have to change its long-running advertising business. In turn, this will mean the way in which advertisements are bought, sold and placed on the internet will also be overhauled.
More broadly, however, a win for prosecutors may make big tech companies such as Google think more seriously about respecting competition.
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