Google’s lucrative ad tech business is in court

The US government is targeting the engine of Google’s immense wealth: the extremely lucrative ad tech business.

In a trial beginning on Monday, the US Department of Justice’s argument that Alphabet, the search engine’s parent company, has an illegal monopoly position in the market will be discussed.

The company earned more than $200 billion (£152 billion) last year from placing and selling adverts seen by internet users.

Alphabet argues that its success is due to the “effectiveness” of its services. However, prosecutors accuse the company of exploiting its market dominance to push competitors into the background.

“It’s a really important industry that generates billions of dollars for consumers every year,” said Laura Phillips-Sawyer, a professor at the University of Georgia School of Law.

“I think all consumers have an interest in this litigation.”

This is already the second major antitrust case against the technology giant in the USA.

In August, a judge ruled Dominance of search was illegalThe penalties that Google and Alphabet face as a result of this decision are still unclear.

According to the lawsuit filed by the Department of Justice (DoJ) and a coalition of states In 2023, Google dominates the digital advertising market and has used its market power to stifle innovation and competition.

Google, meanwhile, claims it is just one of several hundred companies that enables the placement of digital ads in front of consumers.

It argues that competition in the digital advertising space is increasing, not decreasing – and cites increasing ad growth and revenue from companies like Apple, Amazon and TikTok as evidence in a blog post. Response to the Justice Department’s lawsuit in 2023.

Both sides will present their cases to U.S. District Judge Leonie Brinkema, who is expected to issue a ruling.

The single-judge case follows a landmark decision last month in another monopoly case brought by the Justice Department against Google.

Judge Amit Mehta ruled that Google had acted illegally to suppress competition in its online search business.

“Google is a monopolist and has acted like one to maintain its monopoly,” he wrote.

During the trial last year, Google claimed that it dominates online search because it has a better product.

And the company appears to be using a similar defense in the ad tech case.

When asked for comment, the BBC referred to its 2023 blog post, which states: “Nobody is forced to use our advertising technologies – people choose to do so because they are effective.”

Judge Mehta held a status conference on Friday to begin the process of deciding remedies for Google’s conduct.

“The Justice Department has clearly won a big victory and will ride on that momentum,” Dan Ives, managing director of Wedbush Securities, told the BBC.

He said he expected these measures to involve “adjustments to the business model and not a break-up” of the company.

Meanwhile, in Judge Brinkema’s courtroom, the Justice Department may have a difficult time proving its case due to the arcane process that governs advertising technology.

“We all use the search engine. We all understand this product intuitively,” says Rebecca Haw Allensworth, a professor of antitrust law at Vanderbilt University Law School.

In comparison, advertising technology is “so complex that I think it will be a real challenge for the government to make a clear, simple monopolization argument here.”

The US is not the only country where regulators are unhappy with Google’s ad tech business.

On Friday, the UK Competition and Markets Authority said it believed Google was abusing its dominance in the ad tech industry. the results of the first investigation.

The company concluded that Google was using anti-competitive practices to dominate the online advertising technology market. This potentially unlawful conduct could harm thousands of UK publishers and advertisers.

A Google representative said the decision was based on a “flawed” understanding of the ad tech sector.