Judge rules that Google is operating an ad tech monopoly

Google found guilty of ad monopoly for second time, facing potential breakup.

: Judge Leonie Brinkema ruled that Google operates an ad tech monopoly, violating antitrust laws by combining DoubleClick and Google AdX. From 2018 to 2022, Google controlled 91% of the global publisher ad server market and 65% of ad placements. The Department of Justice seeks to dismantle parts of Google's ad operations, especially DoubleClick, worth $31 billion in 2023. Google's Vice President disputes the ruling and plans to appeal, stating Google's tools do not harm competition.

Judge Leonie Brinkema of the US District Court for the Eastern District of Virginia has found Google to be in breach of antitrust laws, labeling the company as operating an illegal monopoly in the online advertising sector. This ruling is significant as it's the second instance in under a year that Google has been called out for monopolistic practices. The judge's 115-page decision highlighted the willful acquisition and maintenance of monopoly power through Google's combination of its ad serving business, DoubleClick, with the ad exchange operations of Google AdX. This strategic coupling allowed Google to forge a 'durable and predominant share of the market,' safeguarded by high barriers to both entry and expansion.

The court documents reveal Google's substantial control over the global publisher ad server market, maintaining a 91% dominance between 2018 and 2022 as reported by Search Engine Journal. Further, it managed 65% of all ad placement transactions, outperforming the nearest competitor by ninefold. This control enabled Google to charge 20% of transaction costs, capturing more than double the fees of its rivals, who averaged a 10% charge. This situation resulted in 'substantial harm to Google's publisher customers, the competitive process, and consumers,' as stated by Judge Brinkema.

The judgment marks Google's liability under Sections 1 and 2 of the Sherman Act for monopolistic practices in its ad tech tools and exchange businesses. However, a claim that Google monopolized ad networks was dismissed, with Google's Vice President of Regulatory Affairs, Lee-Anne Mulholland, asserting that their advertiser tools and acquisitions do not impede competition. She indicated Google's intention to appeal the decision, arguing that publishers choose Google's tools due to their simplicity, affordability, and effectiveness.

The outcome of this ruling opens a significant chapter in potential regulatory actions against Google, with the Department of Justice advocating for the sale of some acquired ad tech elements, such as DoubleClick, purchased in 2007 for $3.1 billion, to break Google's market stranglehold. This sale could have substantial implications on Google's financial landscape, given that in 2023, its Ad Manager generated $31 billion, forming one-tenth of Alphabet's overall revenue. This reflects a broader governmental effort to recalibrate previous antitrust oversights associated with these acquisitions.

This ruling does not only leave Google grappling with its ad tech future but also coincides with upcoming hearings potentially mandating the restructuring of its search operations. Combined, these legal challenges raise substantive threats to Google's operational structure, with the company set to contest these decisions vigorously. As Google's market dominance comes under increased scrutiny, the possibility of Alphabet parent brand losing facets of its business entity becomes ever more plausible.

Sources: New York Times, Search Engine Journal, Gizmodo.

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