WASHINGTON, DC, USA – The US Justice Department accused Alphabet Inc’s Google on Tuesday, January 24, of abusing its dominance in digital advertising, threatening to dismantle a key business at the heart of one of Silicon Valley’s most successful internet companies.
Google, whose advertising business is responsible for about 80% of its revenue, said the government was “doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.” Tuesday’s lawsuit by the administration of President Joe Biden, a Democrat, follows a 2020 antitrust lawsuit brought against Google during the term of Donald Trump, a Republican.
Colorado Attorney General Phil Weiser said that Google’s dominance had led to higher fees for advertisers and less money for publishers with ad space to offer. “We are taking action by filing this lawsuit to unwind Google’s monopoly and restore competition to the digital advertising business,” he said in a statement.In addition to its well-known search, which is free, Google makes revenue through its interlocking ad tech businesses.
The lawsuit raises concerns about certain products in the ad tech stack, where publishers and advertisers use Google’s tools to buy and sell ad space on other websites. That business was about $31.7 billion in 2021 or 12.3% of Google’s total revenue. About 70% of that revenue goes to publishers. The company made a series of purchases, including DoubleClick in 2008 and AdMob in 2009, to help make it a dominant player in online advertising.While Google remains the market leader by a long shot, its share of US digital ad revenue has been eroding, falling to 28.8% last year from 36.7% in 2016, according to Insider Intelligence.