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Ten states have filed a lawsuit against Google, arguing that the company has violated antitrust laws with digital ads.
According to attorneys general from Texas, Arkansas, Idaho, Indiana, Kentucky, Mississippi, Missouri, North Dakota, South Dakota, and Utah, Google LLC uses targeted digital ads and deceptive agreements to dominate search advertising. Through these actions, Google has allegedly secured an anticompetitive monopoly.
“If the free market were a baseball game, Google positioned itself as the pitcher, the batter and the umpire,” Texas Attorney General Ken Paxton said on Twitter.
Google has allegedly secured their monopoly through a variety of antitrust actions including overcharging ad publishers, suppressing rivals, and even entering into an anticompetitive agreement with Facebook.
“As internal Google documents reveal, Google sought to kill competition and has done so through an array of exclusionary tactics, including an unlawful agreement with Facebook, its largest potential competitive threat, to manipulate advertising auctions,” the Google digital ads lawsuit contends.
“The Supreme Court has warned that there are such things as antitrust evils. This litigation will establish that Google is guilty of such antitrust evils, and it seeks to ensure that Google won’t be evil anymore.”
In 2007, Google reportedly purchased DoubleClick – an advertising technology and marketplace company. Since acquiring this company, Google has been able to control digital ads software and the sale of these advertisements, the state attorneys general contend.
Their dominance over this and other resources has reportedly led Google to overcharge ad publishers. Publishers who sell ads through Google allegedly receive only between 58% and 70% of ad revenue. According to the digital advertising lawsuit, the rest of the revenue is directed towards Google.
In addition to allowing the company to overcharge ad publishers, Google’s monopoly has reportedly empowered the tech giant to edge out competitors such as AT&T and Amazon. Despite these companies’ efforts to capture some of the digital ads market, Google’s monopoly has made it nearly impossible, according to the Google lawsuit.
The state attorneys general say that the final nail in the coffin was Google’s alleged agreement with Facebook.
Though the lawsuit’s section on the Google-Facebook agreement is heavily redacted, the states reveal that Facebook agreed to limit their involvement with the digital advertising process. Google reportedly agreed to give Facebook an advantage in their digital ad auctions in exchange for this agreement.
As a result of these purported antitrust actions, Google has allegedly been able to secure a vast majority of the digital advertising market.
In 2019, Google reportedly accounted for 31% of U.S. digital ads while Facebook accounted for 23%. Together, this equates to control of 54% of the market.
According to the state AGs, this monopoly has led to significant profits for Google – accounting for a large majority of their yearly revenues.
“Google has extended its reach from search advertising to dominate the online advertising landscape for image-based web display ads,” the Google digital ads lawsuit alleges.
“As of 2020, Google is a company standing at the apex of power in media and advertising, generating over $161 billion annually with staggering profit margins, almost all of it from advertising.”
Google has denied any wrongdoing and called the digital ads lawsuit “meritless” and “baseless” in a statement to The Wall Street Journal.
This is not the first time Google has been accused of anticompetitive practices. In October, the federal Department of Justice filed a similar lawsuit against the tech company, contending that Google has violated the Sherman Act by blocking other search engine results. The DOJ was joined by Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina and Texas in their federal lawsuit.
Although this lawsuit focused on search engine monopolies, The New York Times reports that the DOJ has another inquiry into Google’s digital ad practices. Further lawsuits from other states may be combined with the Justice Department’s efforts on a federal level.
What are your thoughts on Google’s purported digital ads strategy? Let us know in the comment section below.
The ten states included in the lawsuit are represented by W. Mark Lanier, Alex J. Brown, and Seke DeRose III of The Lanier Firm PC, Ashley Keller and Warren Postman of Keller Lenkner LLC, along with various state attorneys general and legal officials.
The Google Digital Ads Lawsuit is The State of Texas, et al. v. Google LLC, Case No. 4:20-cv-00957, in the U.S. District Court for the Eastern District of Texas.
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