The ad revenue that helped fuel the rise of Google and make it one of the most dominant internet and advertising companies in US history is suddenly no longer guaranteed, after a keenly awaited court ruling on Thursday.
As a result, the worst-case scenario for the Alphabet-owned Google could be that it is forced to spin off its advertising technology section, which would mean the loss of a significant amount of revenue for the seemingly unstoppable search engine.
“For over a decade, Google has tied its publisher ad server and ad exchange together through contractual policies and technological integration, which enabled the company to establish and protect its monopoly power in these two markets,” US District Judge Leonie Brinkema wrote in a court opinion, adding that in her view, Google also bolstered its “monopoly power” by limiting the choice available to users of the search engine, and eliminating various features.
“Accordingly, Google is liable under Sections 1 and 2 of the Sherman Act,” she concluded, referring to a series of US laws designed to protect companies from unfairly boxing out competitors and ensuring that consumers have a choice.
In a statement to The National, however, Google claimed the ruling was a partial victory. “We won half of this case and we will appeal the other half,” said Lee-Anne Mulholland, Google's vice president of regulatory affairs.
“The court found that our advertiser tools and our acquisitions, such as DoubleClick, don’t harm competition. We disagree with the court’s decision regarding our publisher tools. Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.”
When the US Department of Justice (DOJ) filed its lawsuit against the technology giant in 2023, Dan Taylor, the company's vice president of global advertising, hit back against the notion that the company unfairly crushed competitors and stifled options for those seeking to advertise online.
“Antitrust cases should not penalise companies that offer popular, efficient services, particularly in difficult economic times,” he said. “We have spent years building and investing in our advertising technology business to support a vibrant, open web.”
Democratic Senator Elizabeth Warren described Thursday's ruling as a “big win” in the fight to break up big tech. “A judge ruled that Google broke the law, abusing its monopoly to raise prices and crush competition online,” she said in a statement. “Google is an illegal monopolist – and it’s time to break up this tech giant.”
As of 2023, Google controlled nearly 26.5 per cent of the $279 billion US digital ads market, according to research firm eMarketer.
Both the DOJ and Google will now be tasked with submitting the regulatory remedies they deem appropriate before the judge makes a final decision on what happens.
Regardless of what final remedy is decided upon, for the most part average users won't notice a difference unless they own and operate a website they regularly advertise online. For any company that advertises, though, if Google is forced to divest several portions of its ads business, those companies in turn may see lower advertising rates, and eventually have more portals on which to advertise.
Other technology platforms, e-commerce companies, publishers and even media organisations, might also benefit if Google ultimately controls less of the internet ad infrastructure. All of this, however is based strictly on regulatory theory touted by the DOJ.
Mark MacCarthy, a senior fellow at the Institute for Technology Law and Policy at Georgetown University in Washington, said that for the regulatory effort to be successful, the judge will have to take more of an active role in ensuring that any formidable injunctive relief is applied. “To enforce a divestiture the judge would have to supervise continuing restrictions to prevent Google from recreating the anticompetitive arrangements by contract rather than through ownership,” he said.
Prof MacCarthy also indicated that given the sheer size and influence of Google, the US government is in uncharted regulatory territory to ensure an effective outcome. “To do it right would require unprecedented co-operation among the courts involved,” he added. “My view is that this would be better done by a new digital regulatory agency.”
