Google's Antitrust Trial

What is it???

The antitrust lawsuit against Google is a significant legal action initiated by the U.S. government, along with several states, alleging that Google has engaged in anti-competitive practices to maintain its dominance in the online search and advertising sectors.? This originally began in 2019, when US regulators and lawmakers started examining globally known tech companies. In October of 2020 , Google had been filed with a lawsuit by the Department of Justice, in which they were accusing the big tech company has made it nearly impossible for competitors to compete by making its search engine the default throughout various devices and platforms.??

The trial has only now begun, nearly 4 years after the initial lawsuit. Now, going into its fourth week, this complex and far-reaching case has already revealed several significant developments.??

The ruling serves as a significant rebuke to the dominance of large technology companies that have leveraged their internet origins to shape our shopping habits, information consumption, and online searches. It suggests a potential check on Big Tech's influence. This decision is expected to impact other government antitrust cases against major players like Google, Apple, Amazon, and Meta, which owns Facebook, Instagram, and WhatsApp. The last major antitrust action against a tech company was directed at Microsoft over two decades ago.?

It is important to note that the lawsuit does not target other Google Ad tech services such as Google Ads. This service allows businesses to advertise their products or services on search engines, websites, YouTube, and other partner sites.?

The lawsuit focuses on two main issues : whether Google holds a monopoly in the ad tech industry and whether it achieved this through anti-competitive practices. The Department of Justice estimates that Google's share in the ad tech market ranges from 40% to 90% as of 2022. If it is proven that Google holds a 90% share, the company could face significant repercussions.?

The accusation against Google is that it controls a substantial portion of the online advertising market. Specifically:?

• 91% of the market for ad servers, which are platforms that allow websites (publishers) to offer space for ads.?

• More than 85% of the market for ad networks, which are used by advertisers to place their ads on websites.?

• Over 50% of the market for ad exchanges, which are platforms where ads are bought and sold between advertisers and publishers.?

What Happens Next??

If Google is found guilty of monopolistic practices, it could face a breakup order. Given that Google (under parent company Alphabet, which also owns YouTube) accounts for 20% of global advertising revenue , the trial's outcome could reshape the entire advertising industry. The implications are enormous, especially for brands and publishers who may find it challenging to regain control once it has been ceded.?

In recent years, Google Networks, which encompasses services like AdSense and Google Ad Manager, has seen a decline in revenue. According to the company’s annual reports, revenue fell from $31.7 billion in 2021 to $31.3 billion in 2023.?

The trial concerning Google's alleged ad tech monopoly is set to begin in Alexandria, Virginia. Originally planned as a jury trial, Google managed to switch it to a bench trial by paying over $2 million to the federal government, thereby eliminating the only claim that necessitated a jury.?

Google argues that the government's case is overly focused on display and banner ads that appear on desktop web pages, neglecting the significant shift of consumers to mobile apps and the rise of ads on social media platforms over the past 15 years.?

In a pretrial filing, Google’s lawyers stated, "The government’s case concentrates on a limited type of advertising seen on a narrow subset of websites, even though user attention shifted elsewhere years ago. Last year users spent more time accessing websites on the 'open web,' rather than on social media, videos, or apps, was 2012."?

How Does This Impact Canadian Advertisers???

The outcome of this trial could mark a pivotal moment for the advertising industry. Should the court find Google guilty of monopolistic practices, it may lead to significant changes in the digital advertising landscape.??

Although the ruling could open doors for new competitors and boost smaller current players, advertisers are expected to encounter substantial difficulties and adjustments. In the absence of Google's extensive network effects and associated reach, advertisers might find it challenging to attain their target audience.?

This case has the potential to set new precedents for how ad tech operates, encouraging a more competitive environment. Advertisers and publishers should stay attentive, as the trial's resolution could open new opportunities and reshape the dynamics of online advertising, fostering innovation and fairer practices across the industry.?