Does Google have a monopoly on the online advertising business? A high-stakes trial to determine whether that is the case kicked off this week in a federal court in Virginia.
The lawsuit behind the trial was filed in January 2023 by the U.S. Justice Department and attorneys general from eight states—Virginia, California, Colorado, Connecticut, New Jersey, New York, Rhode Island and Tennessee. They said the tech behemoth has too much control over digital advertising because it owns the tools used to buy, sell and display ads, and has manipulated both market prices and the services that ad buyers need to use.
In her opening statement on Monday, CNN reported Justice Department lawyer Julia Tarver Wood said Google has a “trifecta of monopolies” to control digital advertising: its ad server business for publishers, advertising exchange AdX, and its advertiser ad network. “The rules are set such that all roads lead back to Google,” Wood said.
Google argues that its services have made it successful, but that isn’t illegal. It also has made the case that other big players—including Meta, Amazon and Microsoft—have similar digital ad tech suites. The Washington Post reported Google attorney Karen Dunn said in her opening statement that Google has pushed forward online advertising in general through its R&D and investments. “We are a big company among many others, intensely competing,” Dunn said.
The trial comes on the heels of major decisions against Google’s dominance in other areas. A federal judge ruled last month that Google violated antitrust laws to maintain a search engine monopoly. The judge has not yet issued a penalty for the company’s conduct. In December, Google also agreed to pay $700 million and make changes to payment options on its mobile app store to allow users to make purchases using a non-Google billing system.
A ruling against Google’s advertising business has the potential to dramatically change the company’s revenue picture. Analysis firm eMarketer predicts Google will make $77.49 billion from digital advertising this year, representing about a quarter of the total market share. And while Google’s parent company Alphabet has a wide variety of other revenue streams, advertising drives the vast majority of its income. As last month’s search engine ruling shows, judges are not afraid to rule against Google—meaning the digital search and advertising landscape could look vastly different in coming years.
Digital video advertising has recently been taking off, with the IAB seeing a 16% year-over-year increase in spending this year. I talked to Peter Day, CTO of digital advertising company Quantcast, about why digital video has seen so much success and what the future holds. An excerpt from our conversation is later in this newsletter.
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The Justice Department last week unsealed an indictment accusing the Kremlin of pouring at least $10 million into an unnamed Tennessee-based online content creation company as part of an operation to push........© Forbes