Google found guilty of monopolizing online advertising as fight against Big Tech goes bipartisan

A federal court issued a partial verdict against Google on Thursday in an antitrust lawsuit filed by the Department of Justice (DOJ), which accused it of monopolizing the online advertising market. Federal Judge Leonie Brinkema of the Eastern District of Virginia found Google in violation of the Sherman Act “by willfully acquiring and maintaining monopoly power” in two parts of the online advertising market.

The world’s leading online search firm now must battle authorities eager to force Google to sell off major business units in two major cases. Next week, the DOJ will argue in a different court that Google should be forced to divest major business units, potentially including its Chrome internet browser and Android operating system, in the wake of an August 2024 guilty verdict for antitrust violations related to online search.

Google has already announced it will appeal Thursday’s ad tech verdict. Pending appeals, the case will proceed to a similar remedies phase, where the DOJ is expected to seek the divestiture of a part of the ad tech business, which generated 12% of parent company Alphabet Inc.’s revenue last year, approximately $42 billion.

The ad tech case has been overshadowed in the public debate by the search case and antitrust suits against Amazon, Facebook, and Apple. The Trump Administration, usually eager to reverse course on many of former President Joe Biden’s policies, has instead opted to continue all five major antitrust cases.

Observers have viewed the Google ad tech case as the most technical and least ideological of the five big tech cases. Advertising is among the leading components of Google parent company Alphabet Inc.’s revenue. A vast online ecosystem has grown around Google’s search and advertising businesses, introducing much complexity into the court’s analysis of the markets in question.

The online advertising market is often divided into multiple interrelated parts. The verdict applied to two sections of the market where website publishers can view bids from advertisers and manage their own inventory through Google’s popular Ad Exchange and Ad Manager packages. For a third part of the market, where advertisers can supply bids and view inventory from publishers, Judge Brinkema dismissed charges, finding that the DOJ did not meet the criteria to establish a relevant market.

No firm played a greater role in innovating and building the online advertising market than Google. While Google and the DOJ clashed over the definition of markets and measurement of markets (as occurs in every antitrust trial), the simple fact of Google’s dominance is hard to debate. Google’s shares in these markets exceed 85% and sometimes 90%, as observed in the decision. While acquisitions and outmaneuvering rivals played a part in attaining this dominance, in other cases, Google invented these offerings as its business evolved. Few dispute that Google has leveraged its scale and links across markets to create unique sources of value for firms that place online ads. But in the late 2010s, tying arrangements and rules imposed by Google raised concerns in the first Trump administration.

For example, the DOJ accused Google of tying two of its offerings together to the detriment of the website publishers it counts among its customers. Website publishers were only allowed to access the full functionality of Ad Exchange, which allowed them to view real-time bids from advertisers, if they also used Ad Manager to track their own inventory. The DOJ alleged that Ad Manager became and remains the dominant software in the industry because Google required its use to access features in Ad Exchange that publishers considered essential.

Google will have ample scope to dispute technical and legal issues in its appeal and likely remedies phase. Notably, however, the allegations of anticompetitive acts and consumer harm in the ad tech case more closely resemble those found in older cases, while those in the Google search case, along with ongoing cases against Amazon, Facebook, and Apple, depart more from past precedent. Tying allegations like the one discussed above are relatively common in cases forming the body of precedent on which judges rely.

Federal Judge Amit Mehta of the District Court of the District of Columbia ruled in a 2024 decision against Google in the search case, which drew more criticism on fundamental economic grounds than Brinkema’s appears poised to draw, and the possible forced divestitures in the case may be even larger. The case against Google’s search dominance departed more from standard antitrust ideas about consumer welfare. Critics have also questioned whether the search engine default agreements, found to be anticompetitive in that case, truly constrained consumers to the degree asserted by the judge. Imposing among the harshest penalties in U.S. antitrust history on a firm clearly favored by most consumers would signify a huge shift from the past half century of antitrust enforcement.

The paths taken by the two Google antitrust suits, as the White House transitioned from President Donald Trump to Biden and back again, underscore that a shift has already occurred. Democrats formed the brain trust of the New Brandeisian school of antitrust, associated during the Biden administration with Lina Khan at the Federal Trade Commission (FTC) and Jonathan Kanter at the DOJ. But with fears and concerns about big tech growing at the same time, Trump’s first-term FTC and DOJ took notice. Kanter’s DOJ continued the search case it inherited and won, while Khan spearheaded suits against Amazon and Facebook (now underway).

With Trump back in the White House, the bipartisan adoption of “break up Big Tech” is complete. The five flagship cases passed on from Khan and Kanter are all now in the hands of Trump’s antitrust authorities and are moving forward without major change. For those, including this economist, who see the shift as dangerous to prosperity and innovation, this development is cause for concern.

The post Google found guilty of monopolizing online advertising as fight against Big Tech goes bipartisan appeared first on Reason Foundation.