US government sues Google for abuse of dominance in online advertising

US government sues Google for abuse of dominance in online advertising

Google finds itself again in the sights of the American authorities. The US Department of Justice and eight federated states (California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia) announced Tuesday, January 24 to prosecute Google for abuse of a dominant position.

“The complaint filed today alleges that Google engaged in exclusionary, anti-competitive and unlawful practices in order to eliminate or significantly lessen any threat to its dominance in digital advertising technologies,” said Attorney General Merrick Garland. which had the effect “crowd out rivals, diminish competition, inflate advertising costs, reduce revenues for news publishers and content creators, stifle innovation and harm the exchange of information and ideas in the public sphere”ensures the ministry.

More specifically, he lists in a press release his various grievances against the American giant: the acquisition of competitors, i.e. “key digital advertising tools used by website publishers to sell advertising space” ; forced adoption of Google tools; a distortion of competition in the auctions of the advertising market; and the “manipulation of bidding mechanisms in several of its products in order to isolate Google from competition, reduce opportunities for rivals, and halt the rise of competing technologies.”

On online advertising spending, Google threatened by Amazon

“We are one of hundreds of companies that enable the placement of advertisements on the Internet. And it is common knowledge that the competition is increasing”, defended Dan Taylor, vice president of advertising at Google. This one is not entirely wrong: according to the American site Axios, Google represented only 28.8% of all digital advertising expenditure in the United States in 2021, against 34.7% in 2017.

If the trend is also down for its competitor Meta, parent company of Facebook, WhatsApp and Instagram (19.6% market share in 2021 against 20% in 2017), it is rising sharply for Amazon, which should hold 12.7% of this market in 2024. Other companies with high growth potential, such as TikTok, Spotify or Apple, “tend to focus only on their specific platforms”, however, points out the American specialized site Ars Technica, and therefore do not directly threaten Google.

Dan Taylor draws attention to two specific requests from the US Department of Justice. “The DOJ [l’abréviation anglaise du ministère, ndlr] demands that we reverse two acquisitions that were reviewed by US regulators 12 years ago (AdMeld) and 15 years ago (DoubleClick). […] These transactions have been reviewed by regulators, including the DOJ, and have been cleared.”he recalls.

According to the US department’s complaint, Google’s services are indeed in a monopoly position on the market for digital advertising space, on the side of both sellers and buyers. Google’s “DoubleClick for Publishers” ad server, which allows sites to sell their space, has a market share of more than 90%, while the Google Ads Network, aimed at small businesses looking to buy that space, has an 80% market share; the “Display & Video 360” network, dedicated to large advertising agencies, has a market share of 40%. As for the Google Ad exchange, which connects sellers and buyers, its own market share is 50%.

The last dismantling of a company in the United States dates back to… 1982

With this complaint, the DOJ seeks to hit Google in the wallet; in the last quarter of 2021, advertising accounted for 81% of the company’s total revenue. Google has tried everything to avoid such an antitrust lawsuit: last year, the company had proposed to separate its advertising auction activity from its branch dedicated to digital advertising… while keeping the two under the fold of Alphabet, the house -mother. As early as 2020, the US Department of Justice sued Google for illegal monopoly in the search and advertising markets; a complaint that Google challenged in court in early January.

In Europe, the company is under a new investigation opened in March 2022 by the European Commission, for anti-competitive practices on online advertising displays. In the United States, society finds itself under the crossfire of both Democrats and Republicans: in May 2022, a joint bill on competition and transparency in digital advertising was presented to the Senate.

It could force any company dealing with more than $20 billion a year in digital advertising transactions to divest part of their business in the sector, reports the American site The Verge – which corresponds to Google or Meta. A threat which, as Ars Technica reminds us, remains purely virtual for the moment: “the last time a government dismantled a company was 40 years ago”, citing the case of the telecommunications company Bell Systems, split in 1982 into AT&T, Verizon and Lumen Technologies.

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