Does Google have a monopoly over the online ads market?
Image: CNN
The Department of Justice yesterday filed a federal antitrust lawsuit against Google seeking to break up its core advertising business, in a move that could significantly impact the tech giant and cause ripple effects across the entire ads industry.
🤿 A deeper dive… Instead of “Don’t be evil,” Google should've made its unofficial founding motto “Senator, we sell ads.” The company generated $258 billion in annual revenue in 2021, with ~$209 billion of that coming from advertising.
And while the DOJ’s suit isn’t coming after the whole she-bang, it could still impact a significant portion of tech giant’s business. Nearly 30% of its total US revenue in 2021 came from activity that’s currently being targeted by the DOJ.
🗣️ The DOJ’s argument: Tl;dr: That Google has an illegally monopoIy over the digital ads market. Longer version: In the 155-page suit, the DOJ and eight state attorneys general accuse Google of making several “anticompetitive acquisitions” since the mid-2000s that effectively forced online publishers and advertisers into using Google’s ad products.
Federal prosecutors also say these acquisitions unfairly gave Google power on all sides of the online ad industry, allowing it to own and operate a marketplace offering ad-buying services for marketers and ad-selling services for publishers, while participating in the market at the same time.
- Prosecutors claim Google abused this power over the years to essentially rig the online ad market, giving its own products like YouTube or Search an unfair advantage when buying or selling ads, as well as suppressing competition from rival firms.
🔄 On the flip side… Google currently owns ~29% of the US online ads market (after peaking at ~35% in 2017), and has consistently denied accusations of holding monopoly power, arguing the market is extremely crowded and competitive due to major rivals like Amazon, Meta, Microsoft – and now TikTok.
⚖️ The potential impact: As part of its lawsuit, the DOJ is attempting to force Google to spin off three different enterprises from its core business:
- The buying of ads on third-party websites or apps
- The selling of ads on third-party websites or apps
- Ownership of the exchange where said ad business is transacted
📊 Flash poll: In your opinion, should Google be forced to sell some or all of its ad business?
See a 360° view of what media pundits are saying →
Sprinkles from the Left
- Some commentators argue that when big tech companies reach a certain size, they inevitably find ways to promote their own products while excluding or disadvantaging competitors – and thus need to be regulated so this behavior stops.
- Others contend that if Google is forced to divest part of its ad business, the entire online ad industry will suffer, especially independent online publishers that are only able to host ads on their content thanks to Google’s technological advances.
- “Republicans and Democrats, Unite Against Big Tech Abuses” –President Joe Biden
- “Antitrust Suit Against Google Ad Business Undermines a Growing Free Press Online” –Chris Jennewein, Times of San Diego
- “History repeats itself with Big Tech’s misleading advertising” –Tom Wheeler, Brookings Institution
Sprinkles from the Right
- Some commentators argue that Google needs to face bipartisan, popular antitrust reforms like the one laid out in the DOJ’s lawsuit, given that recent polling shows roughly three-quarters of all Americans favor antitrust action against Big Tech companies.
- Others contend that conservatives should be eager to curb the excesses of woke corporations, but should be careful not to destroy the American free-market system in the bargain.
- “Is Chuck Schumer going to let Big Tech quash popular antitrust reform?” –NY Post Editorial Board
- “Conservatives Step into the Left’s Antitrust Trap” –Robert H. Bork Jr., National Review
- “Why Google Plays Down Its Ad-Tech Business but Is Determined to Keep It” –Keach Hagey, Sam Schechner, and Miles Kruppa, WSJ
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