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Lawsuit accuses Google of overt scheme to profit from unfair control of digital advertising platforms
OAKLAND — California Attorney General Rob Bonta, with the U.S. Department of Justice and eight states, filed a lawsuit today charging Google LLC (Google) with operating an unfair monopoly scheme in markets for advertising technology (ad tech). Filed in the U.S. District Court for the Eastern District of Virginia, the lawsuit alleges the California-based technology company leverages control over the technologies through which web display ads are bought and sold, driving out competition and receiving profits that far exceed what could be sustained in a competitive market. This scheme disproportionately hurts advertisers, small businesses, website creators, and consumers, and deters innovation in the ad tech industry.
“In many cases, a business’s online presence can make or break its success, and advertising is a key component in that equation,” said Attorney General Bonta. “Google’s anticompetitive practices and obsessive need for control of ad tech markets has not only controlled pricing, but has stifled creativity in a space where innovation is crucial. Poised to become the fourth largest economy in the world, it is in California’s best interest to ensure that creativity, innovation, and competition in technology are protected.”
Website publishers currently sell more than 40 billion digital advertisements in the United States each day. Collectively, these digital advertisements generate more than $36 billion in annual revenue. The ad tech stack automates advertising matchmaking between two key groups: website publishers and advertisers. These tools have evolved so that today, when an internet user opens a webpage with ad space to sell, ad tech tools virtually instantaneously match that website publisher with an advertiser looking to promote its products or services to that user.
The lawsuit alleges that Google has engaged in an anticompetitive scheme over the last two decades to obtain and maintain control over nearly all aspects of the ad tech stack: technologies that enable website publishers to manage advertising inventory, technologies that enable advertisers to buy advertising inventory, and the advertising exchange through which advertising inventory is auctioned. The coalition asserts in the lawsuit that Google engaged in a systematic campaign to acquire control over the wide swath of high-tech tools necessary to make digital advertising possible, including tools used by publishers, advertisers, and the advertising exchanges that stand in the middle. Then, having inserted itself into all aspects of the digital advertising marketplace, Google used anti-competitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to that control. That power allows Google to dictate how digital advertising is sold and the terms on which its rivals can compete.
By filing the lawsuit, the coalition seeks to block Google’s anticompetitive practices, unwind its anticompetitive acquisitions, and impose a remedy sufficient both to deny Google the fruits of its illegal conduct and to prevent further harm to competition in the future. The lawsuit alleges that through its monopolization and attempted monopolization of the ad server, exchange, and network markets, and through its unlawful tying together of ad tech products, Google violated the Sherman Act.
This action continues Attorney General Bonta’s ongoing work to protect consumers and competition in the technology industries. In December 2022, the Attorney General filed an amicus brief in Gonzalez v. Google urging the U.S. Supreme Court to interpret section 230 of the Communications Decency Act to allow social media companies to be held liable when they use algorithms to make targeted recommendations of harmful third-party content. In November 2022, Attorney General Bonta announced settlements against Google and iHeartMedia resolving allegations that Google paid DJs, predominately at iHeartMedia, to offer misleading personal endorsements of the Google Pixel 4 cell phone. In September 2022, Attorney General Bonta sued Amazon alleging that the company stifled competition and increased prices across California through anticompetitive contracting practices in violation of California’s Unfair Competition Law and Cartwright Act. In January 2022, the Attorney General joined a bipartisan coalition in appealing the dismissal of a lawsuit challenging Meta/Facebook’s illegal, anticompetitive behavior
The lawsuit was filed by the U.S. Department of Justice, California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia.
A copy of the complaint is available here.