Google faces second antitrust trial as US govt goes after its ad-tech business

The legal storm circling Google shows no signs of letting up, and the latest courtroom spectacle could reshape the tech giant’s ad empire. Starting today, Google’s powerful ad tech business goes on trial, and the stakes couldn’t be higher for the company that earns over $200 billion in ad revenue. The U.S. Department of Justice (DoJ) isn’t just pointing fingers — they’re throwing Google into the antitrust ring, accusing the company of illegally monopolizing the digital ad marketplace. Oh, and just to make things more interesting, Britain’s regulators aren’t far behind with their own set of accusations.

The DoJ and a coalition of states say Google’s got its hands all over the ad pie, using its dominance to stifle innovation and elbow out competition. Google, however, stands tall and unbothered, insisting they’re not the only player in town. They argue that their success comes from offering superior services, claiming their ad tech is “simple, affordable, and effective,” not to mention essential for small businesses trying to reach customers in today’s competitive digital world.

Judge Leonie Brinkema will have her hands full as both sides roll out their cases. Google will lean on its usual defense — hey, we’re just really good at what we do — and prosecutors will aim to cut through the complexity of the ad tech industry to show how Google has unfairly cornered the market.

But ad tech isn’t as easy to understand as, say, search. As Vanderbilt University Law School professor Rebecca Haw Allensworth puts it, “We all use search. We all intuitively understand that product. But advertising technology is so complex.”

UK regulator joins the party

The UK’s Competition and Markets Authority (CMA) is singing a similar tune, having just dropped its own hammer on Google. On Friday, the CMA provisionally found that Google has been abusing its dominant position in digital advertising since at least 2015, giving preference to its own ad exchange, AdX, to limit competition. According to the CMA, this could be hurting thousands of British publishers and advertisers who depend on ads to keep their content free or cheaper for users.

Juliette Enser, the CMA’s interim executive director of enforcement, didn’t hold back: “We’ve provisionally found that Google is using its market power to hinder competition when it comes to the ads people see on websites.” Google, naturally, disagrees with the assessment, calling it a “flawed interpretation of the ad tech sector,” and promising to respond accordingly.

Remember last month?

Let’s not forget Google’s already smarting from a ruling in early August, when Judge Amit Mehta declared that the search engine giant is, in fact, a monopolist. In the first major antitrust case against Google, Mehta ruled that the company had maintained an illegal monopoly over online search, stifling competition. Some of the implications? Mozilla, the nonprofit behind the Firefox browser, might lose its financial lifeline. Google’s payments to Mozilla — totaling over $400 million in 2021, for instance — make up about 80% of Mozilla’s operating budget. If those payments get slashed, Mozilla could find itself scrambling to keep the lights on.

Adding fuel to the fire, Yelp recently jumped into the courtroom ring, accusing Google of rigging local search results to favor its own “inferior” services over competitors like, well, Yelp. Yelp’s CEO, Jeremy Stoppelman, didn’t hold back, stating that Google’s practices have stunted competition, which ultimately means users are getting less bang for their search buck.

Google’s defense? We’re not the only ones

Now, if you ask Google, they’ll tell you their ad tech business is as far from a monopoly as you can get. They’re fighting back with claims that there are hundreds of ad tech competitors out there — everyone from retail heavyweights like Walmart to specialized companies like Index Exchange.

In a new blog post published ahead of today’s trial, Google pointed to the ad services offered by rivals like Amazon, Microsoft, and Meta, arguing that the DoJ’s narrow view of the industry is out of touch with reality. They also claim their fees are lower than the industry average, with publishers taking home 70% of ad revenue on their platform. In short, Google’s message to regulators: Why fix what isn’t broken?

Google is also quick to point out that small businesses love their ad tools. A whopping 69% of U.S. small and medium-sized businesses (SMBs) rely on digital ads to find customers, and Google argues that its tools make it easy for even the smallest fish to swim in the big ad pond. According to them, if the DoJ wins this case, it could hurt these businesses and drive-up ad costs, which ultimately hurts everyone — including us, the consumers.

What happens now?

So, where does this leave us? Well, Google’s lawyers are likely bracing for a long and complex trial as the DoJ builds its case. But don’t expect a dramatic breakup of Google just yet. Some experts, like Dan Ives from Wedbush Securities, predict the most likely outcome will be some tweaks to Google’s business model, not a company split.

Still, this trial — alongside last month’s ruling — puts Google’s empire under the microscope. Whether we’re talking about their dominance in search, their grip on local services, or their control of digital ads, it’s clear that regulators around the world are watching.

Featured image: Google