One month after a judge deemed Google’s search engine an illegal monopoly, the tech giant is now confronting a new antitrust lawsuit that could lead to a breakup over its advertising technology.
The Justice Department, along with a coalition of states, alleges that Google has established and maintains a monopoly in the technology that connects online publishers with advertisers. According to court filings, Google’s control over both the buy and sell sides of this technology allows it to retain up to 36 cents of every dollar in transactions between publishers and advertisers.
Google counters that the government’s case is based on outdated internet dynamics, referring to an era dominated by desktop computers and manually entered URLs. The company argues that advertisers are increasingly turning to social media platforms like TikTok or streaming services such as Peacock to reach their target audiences.
Recent financial reports show that revenue from Google Networks, which includes key services like AdSense and Google Ad Manager central to the lawsuit, has actually declined from $31.7 billion in 2021 to $31.3 billion in 2023.
The trial in Alexandria, Virginia, begins Monday and was initially scheduled to be a jury trial. However, Google opted to convert it to a bench trial by paying over $2 million to the federal government, eliminating the jury claim. U.S. District Judge Leonie Brinkema, known for her handling of high-profile cases including terrorism trials and complex patent disputes, will oversee the proceedings.
This Virginia case follows a significant setback for Google in the District of Columbia, where a judge declared its search engine a monopoly, partly due to billions spent annually on exclusivity deals with companies like Apple. No remedies have been decided yet, but future scrutiny may focus on whether Google should continue its exclusivity agreements.
Peter Cohan, a management professor at Babson College, suggested that the Virginia case could be more detrimental for Google, potentially resulting in mandated divestitures of its profitable ad tech business. “Divestitures are definitely a possible remedy for this second case,” Cohan noted, indicating significant potential consequences for Google.
In the Virginia trial, government witnesses are expected to include executives from major newspaper publishers such as The New York Times and Gannett, along with other online news sites. The government claims that Google’s practices have imposed excessive fees on publishers, leading them to either increase ad volume, implement costly paywalls, or shut down.
Google disputes these allegations, arguing that its fees are competitive and that its integrated technology ensures efficient ad delivery and enhanced security. The company also contends that the case is overly focused on outdated advertising methods and does not account for the shift towards mobile apps and social media.
“The government’s case focuses on a narrow type of advertising on a limited subset of websites,” Google’s lawyers argued in a pretrial filing. “The last year users spent more time on the ‘open web’ was 2012.”
The trial is set to span several weeks and will take place in a courthouse known for its traditional practices and minimal use of technology. Cellphones are banned, and even lawyers are restricted to two computers each during the proceedings. Judge Brinkema has emphasized the courtroom’s adherence to conventional practices, rejecting requests for additional technological accommodations.
