Google holds illegal monopolies in ad tech, US judge finds

Alphabet’s Google illegally dominates two markets for online advertising technology, a judge ruled on Thursday, April 17, dealing another blow to the tech giant and paving the way for US antitrust prosecutors to seek a breakup of its ad products.

US District Judge Leonie Brinkema in Alexandria, Virginia, found Google liable for “willfully acquiring and maintaining monopoly power” in markets for publisher ad servers and the market for ad exchanges which sit between buyers and sellers.

The decision clears the way for another hearing to determine what Google must do to restore competition in those markets, such as sell off parts of its business at another trial that has yet to be scheduled. It is the second court ruling that Google holds an illegal monopoly, following a similar judgment in a case over online search.

Publisher ad servers are platforms used by websites to store and manage their digital ad inventory. Along with ad exchanges, the technology lets news publishers and other online content providers make money by selling ads. Those funds are the “lifeblood” of the internet, Brinkema wrote.

“In addition to depriving rivals of the ability to compete, this exclusionary conduct substantially harmed Google’s publisher customers, the competitive process, and, ultimately, consumers of information on the open web,” Brinkema wrote.

However, antitrust enforcers failed to prove a separate claim that the company had a monopoly in advertiser ad networks, she wrote.

US Attorney General Pamela Bondi called the ruling “a landmark victory in the ongoing fight to stop Google from monopolizing the digital public square.”

“This Department of Justice will continue taking bold legal action to protect the American people from encroachments on free speech and free markets by tech companies,” she said.

Lee-Anne Mulholland, vice president of regulatory affairs, said Google will appeal the ruling.

“We won half of this case and we will appeal the other half,” she said, adding that the company disagrees with the decision on its publisher tools. “Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.”

Google’s shares dropped 1.4% after Thursday’s ruling. Experts previously told Reuters the financial hit from a loss in the case would be minimal for the tech giant best known for its search engine.

The DOJ has said that Google should have to sell off at least its Google Ad Manager, which includes the company’s publisher ad server and ad exchange.

Google has previously explored selling its ad exchange to appease European antitrust regulators, Reuters reported in September.

US Senator Amy Klobuchar, a Democrat from Minnesota who previously led the antitrust subcommittee, called the ruling “a big win for consumers, small businesses, and content creators that will open digital markets to more innovation and lower prices.”

Inflection point

Michael Ashley Schulman, chief investment officer at Running Point Capital, called the ruling a “major inflection point” for Google and the tech sector, underscoring US courts’ willingness to entertain “aggressive structural remedies” in antitrust cases.

“This could increase regulatory risk premiums across major tech stocks, especially those like Amazon and Meta that operate similarly integrated ecosystems,” he said.

Meta Platforms is on trial in a separate antitrust case brought by the U.S. Federal Trade Commission accusing the owner of Facebook, WhatsApp and Instagram of holding an illegal monopoly in personal social networks. The FTC has accused Amazon.com of unlawfully dominating online retail markets. The DOJ has also sued Apple, claiming it holds a smartphone monopoly.

Those cases have been pursued during both Republican and Democratic administrations, including US President Donald Trump’s first and second term, showing the enduring bipartisan appeal of antitrust enforcement.

Google now faces the possibility of two U.S. courts ordering it to sell assets or change its business practices. A judge in Washington will hold a trial next week on the DOJ’s request to make Google sell its Chrome browser and take other measures to end its dominance in online search.

At a three-week trial last year on Google’s ad business, the DOJ and a coalition of states argued Google used classic monopoly-building tactics. Those tactics involved eliminating competitors through acquisitions, locking customers in to using its products, and controlling how transactions occurred in the online ad market, prosecutors said at trial.

Google argued the case focused on the past, when the company was still working on making its tools able to connect to competitors’ products, and ignored competition from technology companies including Amazon and Comcast as digital ad spending shifted to apps and streaming video.

In her ruling on Thursday, Brinkema rejected claims about the acquisitions. But she said Google unlawfully tied publishers’ use of its exchange product to use of its ad server, and enacted anticompetitive policies that were “not in its publisher customers’ best interests.” – Rappler.com