Google Docs, Exposed in Antitrust Lawsuit, Reveal Tech Giant’s Upcharges

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Google Antitrust Lawsuit Overview:

• Who: More than half a dozen states are pursuing a lawsuit against Google LLC.
• Why: The states allege that Google has secured a digital ad monopoly that overcharges ad publishers and an unredacted version of the complaint recently revealed the company charges up to four times more than its competitors.
• Where: The litigation is pending in New York federal court.

Google charged two to four times more than competitors for ad space, according to a recently unsealed, unredacted version of a New York federal court antitrust complaint from 17 attorneys general, shedding new light on a lawsuit filed by more than a dozen states in September. 

The unredacted version includes additional figures and quotes. A newly unredacted quote, apparently from Google, states that the search giant processes more daily transactions than the New York Stock Exchange and the NASDAQ combined, according to Law360.

“Google owns the largest buy-side and sell-side brokers,” the unredacted complaint says. “As one senior Google employee admitted, ‘[t]he analogy would be if Goldman or Citibank owned the NYSE.’ Or more accurately, the analogy would be if Goldman or Citibank were a monopoly financial broker and owned the NYSE, which was a monopoly stock exchange.”

The unsealing also reveals the name of the alleged 2018 agreement between Google and Facebook that sought to kill competitive bidding for advertising space: “Jedi Blue.

While Democratic US Senators. Elizabeth Warren of Massachusetts and Richard Blumenthal of Connecticut had previously revealed this name, it was redacted in the former version of the

complaint.

“Google deceived non-Google exchanges into bidding through Google instead of header bidding, telling them it would stop front running their orders when in fact it would not. … After this misrepresentation was uncovered, Google employees discussed playing a trick—a “Jedi mind trick”—on the industry to nonetheless get publishers to cut off exchanges in header bidding,” the complaint states. 

Google Violated Antitrust Laws with Digital Ads, Say AGs

The lawsuit alleges that Google 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 its 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 lawsuit states.

Publishers who sell ads through Google allegedly receive only between 58 and 70 percent 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.

In 2019, Google reportedly accounted for 31 percent of US digital ads while Facebook accounted for 23 percent. Together, this equates to control of more than half 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.

“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,” the lawsuit states.

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 states are represented by their attorneys general, Keller Lenkner LLC, the Lanier Law Firm and the Dugan Law Firm APLC.

The Google Anitrust Lawsuit is In Re: Google Digital Advertising Antitrust Litigation, Case No. 1:21-md-03010, in the U.S. District Court for the Southern District of New York.

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