The Biden administration is intensifying its campaign against Google, launching a second significant antitrust case that seeks to dismantle the tech giant's dominance in the digital advertising industry. This legal battle, which began in a federal courtroom in Alexandria, Virginia, on Monday, represents one of the most ambitious government efforts to challenge the power of a U.S. corporation in decades.
The Justice Department, supported by a coalition of state attorneys general, is arguing that Google has illegally monopolized the nearly $300 billion U.S. digital advertising market. The government is pushing for a breakup of Google's ad tech business, a move that would be unprecedented since the antitrust actions against AT&T in the 1980s and Microsoft in the early 2000s.
"This level of intervention hasn't been seen in generations," said Bill Baer, a former head of the Justice Department's antitrust division under the Obama administration and now a fellow at the Brookings Institution.
The trial, which began this week, is set to scrutinize Google's role in controlling the technology that underpins the buying, selling, and displaying of ads across the internet. The company stands accused of using its market dominance to stifle competition, driving up costs for advertisers, and squeezing revenue for publishers. The Justice Department's case points to Google's strategic acquisitions over the past 15 years as a key factor in cementing its control over the digital ad ecosystem.
At the core of the government's argument is the assertion that Google's overwhelming influence over digital advertising has created a conflict of interest. By controlling the tools used by both advertisers and publishers, as well as the exchange where ads are bought and sold, Google has positioned itself to favor its own services, thereby disadvantaging competitors. This has allegedly resulted in higher fees and reduced transparency for all players in the ad market.
The stakes are high for both sides. Should the government prevail, it could lead to a significant restructuring of Google's business and set a precedent for future antitrust actions against other tech giants. For Google, which generates the majority of its revenue-an estimated $74 billion in 2023-from advertising, the consequences of an unfavorable ruling could be severe.
Google, for its part, has vigorously defended its business practices, arguing that the digital ad market is fiercely competitive and that its products are chosen by advertisers and publishers because they are the most effective and affordable options available. In a blog post released ahead of the trial, Google stated, "In court, we will show that ad buyers and sellers have many options, and when they choose Google, they do so because our ad tech is simple, affordable, and effective."
The company has also pointed to the rise of new competitors in the digital advertising space, including Amazon, Meta, and TikTok, as evidence that it does not hold an unassailable position in the market. Google claims that its market share in digital display advertising has been declining since 2013 and that the overall cost of online advertising has decreased industry-wide.
This latest case is part of a broader, global push to rein in Google's market power. The company is facing similar antitrust challenges in Europe, where regulators are also examining its ad tech business and considering potential breakups and substantial fines. Additionally, countries such as Japan, South Korea, Australia, and South Africa are investigating Google for anticompetitive practices in various aspects of its business, from search to app stores.
"The general consensus is that Google is in a precarious position," said Cristina Caffarra, an economist and critic of the company, highlighting the more than 100 antitrust cases against Google worldwide. "While Google has deep pockets to fight these cases, the sheer number of serious challenges it faces is unprecedented."
The trial in Virginia, overseen by U.S. District Judge Leonie Brinkema, is expected to span several weeks and feature testimony from high-profile executives and industry experts. Unlike the previous antitrust trial against Google's search business, this case focuses specifically on the complex and often opaque world of online advertising-a sector that generates billions of dollars annually and funds much of the internet's content.
One of the government's key challenges will be to clearly explain the intricacies of the digital ad market to the court. "The market is so complicated and not intuitive," said Rebecca Haw Allensworth, a law professor at Vanderbilt University. "The DOJ needs to help the judge wrap her mind around it."
