Why this Google antitrust lawsuit is promising

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By the editorial staff

Google has been hit with so many antitrust lawsuits in recent years that it’s easy to see the latest one as pretty much the same thing. Yet the Justice Department case, announced last month, deserves close attention, not because it tests an innovative theory of competition, but because it doesn’t.

When most Americans think of Google, they think of a search engine behemoth, and of course, they’re right. However, unlike another DOJ case brought under the previous administration, the latest lawsuit doesn’t focus on the power the company holds over what we search for on the Internet. Instead, it focuses on what we don’t go looking for and see anyway: advertising. The argument is relatively simple: Google dominates this market by playing a key role in technology at every point along the “ad stack.” In a nutshell, here’s how it works:

How online ads are sold: Websites use the publisher’s so-called ad server to determine how ads are sold.

Google’s Many Roles: Google owns a tool commonly known as DoubleClick for Publishers*, which the Justice Department estimates holds about 90 percent of the publisher ad server market.

Websites and advertisers buy and sell space on digital ad exchanges.

Google owns Google Ad Exchange*, or AdX, a tool where deals are actually made between websites and advertisers. AdX has about 50 percent of the market share, according to the DOJ.

Advertisers use tools that allow them to identify the audience they are targeting.

Google has an industry-leading tool for purchasing advertising space on the web called DV360.

It also has Google Ads, a tool for buying ads on Google sites, like search and YouTube, as well as third-party sites.

So, what is the problem? The Justice Department says Google has cornered the advertising market as a whole, leveraging control over every point of the advertising stack to exert its grip on every other aspect, and to extort inflated fees from website publishers and advertisers along the way. What is interesting about this argument is in part how uninteresting it is compared to others the government has made recently: no attempt to argue that competition for its own sake, rather than simple consumer welfare, requires protection; no stabbing to prevent consolidation in a market that doesn’t exist yet.

This is a good old-fashioned antitrust enforcement. The argument is that by owning all these tools and then abusing that concentration, Google has caused prices to rise, and those increases are ultimately passed on to consumers. Of course, proving that prices have risen above what they would have been in the absence of Google’s alleged anti-competitive behavior isn’t easy. But if the DOJ can pull it off (a similar case filed in 2020 by state attorneys general in 16 states plus Puerto Rico is pending in New York), the judge won’t be able to shrug and ask, “So what?”

However, challenges loom. Google’s market share in digital ad spend is 26.5%, plus YouTube’s 2.9%. It’s down from 37.4 percent at its peak. Rivals including Amazon, TikTok, Hulu and Roku are on the rise. Google points out that advertisers and publishers are increasingly mixing and matching the technologies they buy and sell, rather than opting for one company’s offerings. The company also disputes many of the allegations of its own conduct contained in the complaint. And there’s another snag: some of these allegations would be manifestly illegal if proven, such as imposing contractual constraints that prevent trading partners from dealing with rivals. Others, however, would not.

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