DOJ drops the hammer on a FAANG, not Apple

"In addition to declaratory relief, our complaint seeks damages and the divestiture of certain Google ad tech products."

From Attorney General Merrick B. Garland's remarks on the "lawsuit against Google for monopolizing digital advertising technologies," posted Tuesday:

Today, the Department of Justice, joined by eight states, filed a civil antitrust lawsuit in the U.S. District Court for the Eastern District of Virginia against Google.

We allege that Google has used anticompetitive, exclusionary, and unlawful conduct to eliminate or severely diminish any threat to its dominance over digital advertising technologies.

These technologies, which are known as “ad tech,” automate advertising sales by website publishers to online advertisers.

When an internet user opens a webpage that has ad space to sell, ad tech tools almost instantly match the website publisher with an advertiser looking to promote its products or services to the website's user.

This product and process typically involves the use of an automated advertising exchange. This exchange runs a high-speed auction designed to identify the best match between a publisher selling internet ad space and advertisers looking to buy it.

As alleged in our complaint, for 15 years, Google has pursued a course of anticompetitive conduct that has allowed it to halt the rise of rival technologies, manipulate auction mechanics to insulate itself from competition, and force advertisers and publishers to use its tools.

In so doing, Google has engaged in exclusionary conduct to severely weaken, if not destroy, competition in the ad tech industry.

As detailed in our complaint, we allege that Google's anticompetitive conduct extends to three significant elements of the digital ad buying process.

    1. First, Google controls the technology used by nearly every major website publisher to offer advertising space for sale.
    2. Second, Google controls the leading tool used by advertisers to buy that advertising space.
    3. And, third, Google controls the largest ad exchange that matches publishers and advertisers together each time that ad space is sold.

As a result of this scheme, website creators earn less, and advertisers pay more. That means fewer publishers are able to offer internet users content without subscriptions, paywalls, or other forms of monetization.

Our complaint alleges that Google has violated Section 2 of the Sherman Antitrust Act by:

    1. Monopolizing the market for the technology used by publishers to offer ads on their websites;
    2. Monopolizing or attempting to monopolize the ad exchange market; and
    3. Monopolizing the market for the ad network technology advertisers use to buy digital advertising space.

Our complaint also alleges that Google has unlawfully tied its ad exchange and its publisher ad server, in violation of Sections 1 and 2 of the Sherman Act. And finally, we allege that the United States, as an advertiser, has incurred damages by reason of Google's violations of the antitrust laws.

In addition to declaratory relief, our complaint seeks damages and the divestiture of certain Google ad tech products. It also seeks an injunction preventing Google from continuing to engage in the anticompetitive practices described in the complaint, and any other practices with the same purpose and effect as the challenged practices.

My take: Surprised the deal to make to make Google the default search engine on Apple's products didn't come up. Perhaps it's embedded in the Sherman Antitrust allegations.

More here, including a diagram of how the buy side meets the sell side:

5 Comments

  1. David Emery said:
    I think there’s a triple whammy here: (1) Google hosts ads. (2) Google runs ad auctions. (3) Google has stuff they advertise and they make commercial use of information from ads. (Thus they are a customer of their own hosting and ad auction services.)

    Apple can be argued to match 2 of these (Apple hosts ads/hosts app store and Apple sells stuff on those stores.) So maybe there’s enough space between Google’s business model and Apple’s business model to keep Apple on the safe side of (existing!) law. Still, I think legal pressures are the primary business risk to AAPL.

    4
    January 24, 2023
  2. Michael Goldfeder said:
    When I read these same faceless contentions: “As a result of this scheme, website creators earn less, and advertisers pay more. That means fewer publishers are able to offer internet users content without subscriptions, paywalls, or other forms of monetization.”, it just reeks of speculation. So creators ought to be able to jump on any platform for free? How do they figure fewer publishers? If it was free I’d publish? What canned malarky.

    This is the same rhetoric the Coalition for App Fairness and EU is shoveling in front of everyone. Since Spotify had to lay off employees, I’m waiting for that to be another complaint channeled by the EU that Apple is destroying its competitors.

    At the end of the day I’m indifferent to Google. But I find that they deliver what I want when I click on their icon. If they weren’t solving my requests, then I’d look elsewhere. But what’s the difference when I buy a car and it comes with tires made by Goodyear? Bridgestone? Michelin? Does that curtail competition by other tire manufactures that might not yet even be in existence?

    To me it’s all conjecture designed to cloud the real issue at play: Creators and every other company want a free ride! They’re entitled! Just ask them! But nobody will come out and state the obvious. Are consumers being ripped off? Just the entitlement crowd who are of the universal opinion that they ought to be able to ride for free and sell their services and wares with zero liabilities.

    3
    January 24, 2023
  3. Steven Philips said:
    I’m not familiar enough with Google’s processes to say yes or no. I don’t particularly like Google but I have to say that my sense of the language in the complaint is that it could be boilerplated and applied all over. Including to Apple. Like this is just the start of a legal meat grinder. It’s kind of scary.

    0
    January 24, 2023
  4. George Providakes said:
    Like MS Windows vs Apple, MS explorer vs Netscape, Apple iTunes vs Spotify or whomever, Amazon book monopoly vs Apple iBooks, Apple vs Android, Android vs Java, etc., these are mostly showboating, rarely achieve objectives, and rapidly overtaken by technology e.g., Windows bypassed with mobile smartphones.

    1
    January 24, 2023
  5. Jonny T said:
    An excellent read in the FT today by Patrick McGee about Apple’s ad aspirations.

    I’m surprised the Google ad monopoly has taken this long to get attention. Not just to do with its platform, but the bigger net. I applaud.

    2
    January 25, 2023

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