Google Goes On Trial In US Over Ad Tech Dominance

Google’s second major US antitrust trial begins on Monday, with the US Department of Justice targeting the company’s adtech business, which it claims is an illegal monopoly that must be broken up.

While any outcomes from the trial are likely to be months or years away, the proceedings are being closely watched as advertising is the core of Google’s business model, generating hundreds of billions for the firm each year.

Numerous publishers and advertisers depend on the company’s services, meaning any major change would be disruptive.

The online advertising market is expected to reach some $691 billion (£528bn) overall this year.

Ad market power

Breaking up Google’s advertising business would be “biggest forced corporate shake-up since Microsoft unbundled the Internet Explorer browser in 2000”, said Macquarie analyst Tim Nollen in a research note.

Google’s ad server, buying tools and ad exchange are the most popular in the three categories, which the Justice Department says the company has exploited to impede rival technologies and companies, inflate advertising costs and reduce revenue for publishers.

The company rigs auctions in its favour and gives its own products advantages while blocking competitors’ access to significant data, the DOJ argues.

As an example of Google’s market power, the Justice Department alleges Google suppressed a competing auction process called Header Bidding by promoting its own Open Bidding process while spreading misinformation about the competing technology.

The company allegedly worked with Facebook in a secret deal codenamed “Jedi Blue” to limit support for Header Bidding and manipulate ad auction rules to disadvantage it while pushing Open Bidding, the Justice Department says.

Google says its tools work with those of competitors and that it is not obliged to give rivals access to its proprietary data.

The trial focuses on the open web display ad market, something Google has contested, since it says ads on social media delivered on smartphones and other devices is the more relevant market for ad tech, in which it holds market share of 30 percent or less.

Bench trial

The bech trial is to be decided by US District Judge Leonie Brinkema of the Court of the Eastern District of Virginia, who has shown disapproval of what she perceives as the company’s efforts to suppress internal evidence.

In August pretrial hearings Brinkema said she found it “absolutely inappropriate” that Google chief legal officer Kent Walker had advised employees to change chat settings to automatically delete posts in conversations about sensitive legal matters.

The US Department of Justice, along with multiple states, launched its probe into Google’s digital advertising practices in January 2023.

The UK’s Competition and Markets Authority (CMA) on Friday provisionally found that Google abused its market dominance in advertising technology to favour its own ad tech services in open display advertising.

The findings relate to how Google allegedly self-preferences its own ad exchange, harming competition and, as a result, advertisers and publishers, the CMA said.

The European Commission said in June of last year a “behavioural remedy is likely to be ineffective to prevent the risk” of further abuse in the ad tech sector and that Google may be forced to break up its advertising business from its core services.

A US federal judge last month ruled Google acted illegally to maintain its search monopoly and has given the Justice Department until the end of the year to outline remedies, which could include divestiture of businesses such as Android or Chrome.