Google has ruled the online ad marketplace for years. Now it faces 10 state attorneys general over its dominance.
A group of 10 state attorneys general filed suit against Google on Wednesday, alleging anti-competitive practices related to its ad technology. Texas Attorney General Ken Paxton, a Republican, led the investigation into Google and announced the lawsuit in a video posted to Twitter a few hours before the lawsuit was filed.
“Google repeatedly used its monopolistic power to control pricing, engage in market collusions to rig auctions in a tremendous violation of justice,” Paxton said in the video.
The lawsuit, which is one of several antitrust cases Google now faces, alleges that Google engaged in a wide variety of anti-competitive behavior to create and maintain its monopoly power in digital ad markets and keep out competitors. It also alleges that Google and Facebook illegally agreed not to compete with each other. This latest legal action is happening after Google and other big tech companies like Facebook have for years been accused of employing anti-competitive practices.
“In addition to representing both the buyers and the sellers of online display advertising, Google also operates the largest exchange AdX,” reads the lawsuit, which was filed by Republican attorneys general in Arkansas, Idaho, Indiana, Mississippi, Missouri, North Dakota, South Dakota, Utah, and Kentucky, as well as Texas. “In this electronically traded market, Google is pitcher, batter, and umpire, all at the same time.”
This is akin to the New York Stock Exchange also controlling the buying and selling of stocks, according to Sally Hubbard, director of enforcement strategy at the Open Markets Institute and author of Monopolies Suck.
“They’re getting information that they shouldn’t have if the market is supposed to be properly functioning,” Hubbard told Recode. “We don’t tolerate this in other sectors.”
Google didn’t respond to a request for comment. Google spokesperson Julie McAlister told the New York Times that “Attorney General Paxton’s ad tech claims are meritless” and that the company “will strongly defend ourselves from his baseless claims in court.”
This lawsuit is the first to focus on Google’s dominance in ad tech. More specifically, it says that Google uses its market power to “extract a very high tax of [redacted] percent of the ad dollars otherwise flowing to the countless online publishers and content producers like online newspapers, cooking websites, and blogs who survive by selling advertisements on their websites and apps.” In turn, these businesses pass costs on to consumers, causing them harm, according to the lawsuit.
Last year, Google brought in nearly $162 billion in revenue, the vast majority of which came from advertising, which it manages through its advertising tools. Google controls nearly a third of all digital ad spending in the US, according to eMarketer. Since its tools dominate all parts of the ad process, Google is said to have unfair visibility that allows it to maintain its dominance, according to the Wall Street Journal’s Keach Hagey and Vivien Ngo, who last year explained how Google’s ad tech works and why publishers and rivals have long complained about it.
This lawsuit is the latest in a series of antitrust suits against Big Tech, including one filed against Google in October by the Justice Department and 11 states. The DOJ alleged that Google used its search dominance to preserve its other monopolies, including advertising. A bipartisan lawsuit regarding Google’s monopolization of specialized search like maps and reviews is expected soon from attorneys general from Colorado and Nebraska. Earlier this month, the Federal Trade Commission and 48 states filed a suit against Facebook, saying that its acquisitions of Instagram and WhatsApp amounted to anti-competitive practices that harm consumers.
Meanwhile, Paxton, the Texas attorney general, has recently made news for filing specious lawsuits against swing states in an effort to overturn the results of the presidential election. He lost the lawsuit but, the Atlantic argues, won in an effort to bolster his political career and distract from his own legal troubles, including securities fraud and felony counts he faces for allegedly trying to get investors to buy stock in a company without telling them he got a commission for it.
Antitrust cases are notoriously difficult to win, but the sheer number of them arising this year against Big Tech suggests the government at least think there’s a chance.
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