A month after a judge declared Google’s search engine an illegal monopoly, the tech giant is facing another antitrust lawsuit that threatens to break up the company — this time over its advertising technology.
The Justice Department and a coalition of states contend that Google has created and maintains a monopoly over the technology that connects online publishers with advertisers. Dominance over software on both the buy and sell sides of the transaction allows Google to keep as much as 36 cents on the dollar when it brokers sales between publishers and advertisers, the government contends in court papers.
Google says the government’s case is based on an internet of yesteryear, when desktop computers ruled and internet users carefully typed precise World Wide Web addresses into URL fields. Advertisers are now more likely to turn to social media companies like TikTok or TV streaming services like Peacock to reach their audiences.
In recent years, Google Networks, the division of the Mountain View, California-based tech giant that includes services like AdSense and Google Ad Manager that are at the center of the case, has seen its revenue fall from $31.7 billion in 2021 to $31.3 billion in 2023, according to the company’s annual reports.
The trial over the alleged ad tech monopoly begins Monday in Alexandria, Virginia. It was initially supposed to be a jury trial, but Google maneuvered to force a bench trial, writing a check to the federal government for more than $2 million to dismiss the only lawsuit filed by the government that required a jury.
The case will now be decided by U.S. District Judge Leonie Brinkema, an appointee of former President Bill Clinton and known for her high-profile terrorism trials, including that of 9/11 defendant Zacarias Moussaoui. Brinkema, however, also has experience in highly technical civil trials, as she works on a court that hears an outsized number of patent infringement cases.
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The Virginia case comes on the heels of a major defeat for Google over its search engine, which generates the bulk of the company’s $307 billion in annual revenue. A judge in the District of Columbia declared that the search engine was a monopoly, maintained in part by the tens of billions of dollars Google pays each year to companies like Apple to make Google the default search engine presented to consumers when they buy iPhones and other gadgets.
In that case, the judge has not yet imposed any corrective measures. The government has not offered proposed sanctions, though there could be close scrutiny over whether Google should be allowed to continue making exclusivity deals that ensure its search engine is the default choice for consumers.
Peter Cohan, a professor of management practice at Babson College, said the Virginia case could potentially be more damaging to Google because the obvious remedy would be to require it to sell parts of its advertising technology business that generates billions of dollars in annual revenue.
Divestments are definitely a possible remedy for this second case, Cohan said. It could potentially be more significant than it initially appears.
At the Virginia trial, government witnesses are expected to include executives from newspaper publishers such as The New York Times Co. and Gannett, and online news sites that the government says have suffered particular harm from Google’s practices.
Government lawyers wrote in court papers that Google charged extraordinary fees at the expense of website publishers who make the open internet vibrant and valuable. As publishers make less money from selling their advertising inventory, they are forced to place more ads on their websites, put more content behind costly paywalls or cease operations altogether.
Google denies charging excessive fees compared to competitors. The company also says integrating its technology on the buy-side, sell-side and in the middle ensures ads and web pages load quickly and improves security. And it says customers have options to work with third-party ad exchanges.
Google says the government’s case incorrectly focuses on display and banner ads that load on web pages accessed through a desktop computer and fails to take into account the migration of consumers to mobile apps and the rise of ads placed on social media sites over the past 15 years.
The government’s case centers on a limited type of advertising seen on a narrow subset of websites when users’ attention shifted elsewhere years ago, Google’s lawyers write in a preliminary filing. The last year when users spent more time accessing websites on the open web, rather than on social media, videos or apps, was 2012.
The trial, expected to last several weeks, is being held in a courtroom that strictly adheres to traditional practices, including resisting technology in the courtroom. Cellphones are banned in the courtroom, much to the chagrin of a tech-savvy press corps accustomed in the District of Columbia trial to tweeting live updates as they happen.
Even the lawyers, who are numerous on both sides, are technologically limited. At a pretrial hearing on Wednesday, Google’s lawyers asked to be allowed to have more than the two computers each side is allowed to have in the courtroom during the trial. Brinkema denied the request.
“This is an old courtroom,” he said.
(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First published: September 9, 2024 | 10:53 am IS
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