Federal Court Ruling Declares Google a Monopolist in Ad Tech
In a significant legal decision, a federal judge determined on Thursday that Google holds a monopoly in specific segments of the online advertising market. This ruling marks the second instance within a year where Google has been found to contravene U.S. antitrust laws, following a previous ruling that identified the company as holding an illegal monopoly in the search engine market.
Details of the Ruling
Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia concluded that Google has unlawfully monopolized elements of its advertising technology business, particularly affecting the programmatic ad sector—a crucial revenue stream for the tech giant. In 2022, Google reported nearly $30.4 billion in revenue generated from advertising on third-party apps and websites. This ruling raises concerns regarding potential penalties that could disrupt these sales.
“In addition to depriving rivals of the ability to compete, [Google’s] exclusionary conduct substantially harmed Google’s publisher customers, the competitive process, and, ultimately, consumers of information on the open web,” Judge Brinkema stated.
Legal Basis for the Ruling
The findings were rooted in a violation of Section 2 of the Sherman Act, a foundational law governing antitrust issues in the United States. Judge Brinkema indicated that Google had “willfully acquired and maintained monopoly power” in the market for publisher ad servers and open-web display ad exchanges, and had unlawfully tied its publisher ad server (DFP) to its ad exchange (AdX).
Implications for the Advertising Market
Google’s dominance in connecting publishers to advertisers through a complex chain of systems has long been criticized, particularly for its ability to favor its own services at the expense of competitors. Significant components of its advertisement technology portfolio, including the acquisition of DoubleClick in 2007, have bolstered this dominance.
While the ruling confirmed Google’s monopolistic practices regarding publisher tools, Brinkema dismissed claims by the Justice Department that Google monopolized the market for advertisement-buying tools. The court found the government’s definition of that market too restrictive and undefined.
Response from Google and Future Developments
In response to the ruling, Google expressed its intention to appeal the decision. Lee-Anne Mulholland, the company’s Vice President of Regulatory Affairs, highlighted that Google “won half the case” by successfully defending its advertiser tools. She stated, “Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.”
Background of the Case
This antitrust case, initiated in January 2023 by the Department of Justice along with eight states, accused Google of stifling competition by acting as a dominant middleman in the advertising marketplace and retaining a substantial share of ad revenues. The trial commenced last September, concluding with closing arguments delivered in November.
Next Steps
The Department of Justice has yet to comment on the ruling. Jonathan Kanter, an attorney involved in overseeing the trial, expressed via social media that the ruling represents a monumental success for antitrust enforcement, the media sector, and the preservation of an open internet.
This latest adjudication follows a separate ruling from August, when a district judge identified Google as maintaining an illegal monopoly over general search and search text ads. The Justice Department has recommended that Google be compelled to completely divest its Chrome web browser and cease making payments to partners like Apple for preferential treatment on its devices. A trial to determine the final outcomes of that case is slated to commence shortly.
Judge Brinkema has requested Google and the Justice Department to present a schedule outlining the next steps to establish remedies concerning the ad tech case, which could potentially lead to divestitures of Google’s publisher ad tools.