Will Google no longer have a monopoly on the digital advertising market?

This post originally appeared on?Andata.io

On January 24, 2023, the US Department of Justice filed a lawsuit against Alphabet Inc. (Google). Currently, Google is the largest broker, platform, and auctioneer in the digital advertising market for websites and mobile applications. The Justice Department believes that Google uses its monopoly position to deliberately buy competing products, harms advertising platforms and advertisers trying to use competitor's products, and promises a long legal battle with serious consequences for the digital advertising industry.

Here is part of the accusation against Google:

"For 15 years, Google has followed an anti-competitive course of conduct that has allowed it to stop the development of competing technologies, manipulate the auction mechanics, protect itself from the competition, and force advertisers and publishers to use its tools."

Google's business includes a tool that advertising platforms can use…

The reasons for the antitrust lawsuit against Google

Let's try to understand the essence of the new lawsuit. It says that Google used anti-competitive tactics to increase the market share of its own advertising product. What kind of tactics are these?

It all started when Google bought DoubleClick in 2008, a popular service that helps site owners sell their advertising space. This deal was approved by the federal regulator, but the regulator did not require Google to separate the DoubleClick division from the division that helps advertisers buy advertising space, or from the division that manages the exchange, which Google later called AdX.

How does this look from the perspective of antitrust legislation? Google buys advertising space from site owners with one hand, and sells it to advertisers with the other hand, and all this is done through its own exchange, through which it sets rates. OK, you don't like the rates, you can go buy advertising somewhere else, right?

If there were more or less large competitors, it would be possible to do so, but there are not. How did this happen? Google did not allow competing exchanges, which are managed by Yahoo, Microsoft, and others, to operate simultaneously…

What could this lead to in the future

Let's imagine. What could this struggle end with? Assume that Google will be forced to separate the service for advertisers from the platform service, make the auction transparent, and clearly and openly allocate its commission. Most likely, new similar systems will appear, offering alternatives in price, in a more convenient service, or in something else.

Third-party bid systems will be allowed into the auction, which will be able to offer their more efficient bidding strategies and will also earn commission money from the ad spent.

Perhaps these commissions and components of the entire auction system will be regulated in some way.

In any case, limiting the monopoly will lead to the emergence of new products and new players in the advertising market. Competition between them in the future will lead to the fact that this market will cease to be an auction market and will become a market of advertisers and platforms.

Systems like Andata, which help purchase the best advertising spots based on bid forecasts powered by artificial intelligence, will undoubtedly become even higher in demand.

The chances of Google losing its monopoly position are uncertain. There have been claims made against Google in regard to antitrust legislation, and regulatory procedures have taken actions such as ruling against Google's plans to remove third-party cookies from the Chrome browser, or accusing Google of providing privileged modes to its patented technologies, among others. However, the outcome of these cases and their impact on Google's monopoly position is uncertain and may vary depending on the jurisdiction and specific circumstances.

This post originally appeared on?Andata.io