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Google Faces Case Against Monopoly In Digital Advertisement Market By US Justice Department

By Amit - January 25, 2023

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In this latest suit, prosecutors have taken aim at Google’s highly profitable advertising business. They say it should be scrapped to level the playing field for other companies. A few days ago Google laid off thousands of people. The company’s CEO Sundar Pichai enumerated the reason behind this. But now a case has been registered against the company in the US court. In this case done by the US Department of Justice, Google has been accused of illegally monopolizing the digital advertising market. Apart from the Department of Justice, 8 states have also filed cases regarding Google’s illegal monopoly in the digital advertising market.

Google’s advertising deal is set to generate more than $200 billion in sales in 2021 and is the biggest earner for parent company Alphabet. The US said the revenue was illegally retained by a monopoly that “corrupted legitimate competition in the ad tech industry.”
The filed case states that Google has used anti-competitive, exclusionary and illegal means to eliminate or severely reduce any threat to its dominance over digital advertising technologies.

The case was initiated by the Department of Justice (DOJ) in conjunction with eight US states: California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia.

At the heart of the matter is Google’s dominance of its ad tech business, the technology that companies rely on for their online advertising needs. Prosecutors said Google now “controls” both the buying and selling side of the vital sector, meaning website builders earn less and advertisers pay more, while new innovation is stifled by a lack of rivals. “In its pursuit of huge profits, Google has caused great harm to online publishers and advertisers and to American consumers,” Deputy US Attorney General Lisa Monaco said in a statement.

The federal case follows state lawsuits against Google alleging it illegally dominated the markets for online search, advertising technology and apps on the Android mobile platform. Insider Intelligence analyst Evelyn Mitchell said, “Google should be worried.” “Advertising accounts for the bulk of its revenue, and its advertising business is as powerful as it is because of its scale and the way it integrates its advertising products,” he said.

Google denies it is a monopoly, saying rivals in the online advertising market include Amazon, Facebook-owned Meta and Microsoft.

The Computer and Communications Industry Association, a large tech lobby, said the lawsuit also failed to take into account offline rivals, which include advertisements in newspapers and on television and radio.
“The government’s argument is that digital advertising is not in competition with print, broadcast and outdoor advertising,” the CCIA said in a statement.

Let us tell you that Google is also facing a major investigation of its advertising business in Europe, where the European Commission may press charges against the company by the end of this year.

The United States is home to global tech giants Google, Apple, Amazon and Meta and relies heavily on the courts to curb their power.

Earlier this month, Biden urged Republican and Democratic lawmakers to break years of political impasse and pass legislation that would set tougher rules for big tech companies.

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