Center for Technology and Innovation

I⁠t⁠’s An⁠t⁠⁠i⁠⁠t⁠rus⁠t⁠ Groundhog Day for Google

By: Dr. Edward Longe / 2023

Dr. Edward Longe


Center for Technology and Innovation


For Google, the world’s most popular search engine, it’s Groundhog Day as they face yet another antitrust lawsuit filed by federal enforcers who are increasingly skeptical of large technology companies. This time, the Department of Justice’s Antitrust Division (DoJ), led by Google’s chief antagonist Johnathon Kanter, is challenging the company’s perceived control of digital advertising technologies “that website publishers depend on to sell ads and that advertisers rely on to buy ads and reach potential customers.” This case is the second antitrust suit the company is facing from the DoJ, following a 2020 civil suit that claimed the giant had monopolized search and search advertising. 

The government’s case against Google rests on four arguments. First, the DoJ contends that Google engaged “in a pattern of acquisitions to obtain control over key digital advertising tools used by website publishers to sell advertising space.” Second, the government alleges Google locked in “website publishers to its newly-acquired tools by restricting its unique, must-have advertiser demand to its ad exchange, and in turn, conditioning effective real-time access to its ad exchange on the use of its publisher ad server.” Third, the government contends that the California-based tech giant limited “real-time bidding on publisher inventory to its ad exchange, and impeded rival ad exchanges’ ability to compete on the same terms as Google’s ad exchange.” Finally, the Antitrust Division alleges the company manipulated “auction mechanics across several of its products to insulate Google from competition” thereby depriving “rivals of scale” and halting “the rise of rival technologies.” 

As a result of these actions, the government alleges, Google has “corrupted the competitive process by which publishers and advertisers select, and then use, pivotal ad tech tools… undermined publishers’ and advertisers’ ability to make optimal matches for advertising inventory on mutually agreeable terms,” and “interfered in rivals’ attempts to partner successfully with Google’s publisher and advertiser customers.”

As punishment, the government is asking federal courts to break up Google, separating the search engine from its digital advertising business. Such a punitive request risks harming businesses that depend on the tech giant to showcase their goods and services to millions of potential consumers. 

While the government’s case, spanning 155 pages, may be highly critical of Google, it ignores the reality that digital advertising is a highly competitive marketplace that generates significant value for both advertisers and consumers, and perhaps ironically, the acquisitions at the heart of the government’s case were approved by antitrust authorities. The government is essentially asking for a mulligan, but a mulligan that would chill mergers and acquisitions and investment.

Arguably the weakest element of the government’s case against Google’s digital advertising activities is that they have monopolized the market. In reality, digital advertising is a highly competitive marketplace where companies seeking to advertise their products online have a range of options. Currently, Google only accounts for around 27% of digital advertising revenue, down from a 2016 high of 31.5%. Meta, Google’s closest competitor, only accounts for 25.2% of revenues. At the same time Amazon, Apple, and even TikTok are growing their advertising businesses, giving companies more choices in publishing digital advertising and more opportunities to reach consumers. Such variety undermines the DoJ’s assertions that Google has monopolized the digital advertising market. If it had, such options would not exist given only one provider can exist in a monopoly. 

The numerous options available to companies seeking digital adverts is also working as the cost of digital advertising has been falling over the past few years, granting more companies the opportunity to advertise online and reach more consumers. If the government’s case were accurate, this trend would not have occurred, and those seeking advertising services would have see prices increase as Google would have demanded higher prices. This creates a situation whereby the DoJ is directly intervening in a healthy market with the competition that is depressing prices. 

It should also be noted that the Federal Trade Commission (FTC) and DoJ both cleared mergers at the center of the most recent antitrust complaint. Back in 2007, the FTC approved Google’s $31.5 billion acquisition of Doubleclick, noting that under the terms of the deal, “it is unlikely that Google could effectively foreclose competition in the related ad intermediation market following the acquisition.” Similarly, the DoJ cleared Google’s acquisition of AdMeld in 2011, recognizing that “the transaction is not likely to substantially lessen competition in the sale of display advertising.” 

The DoJ’s attempt to unwind previously approved deals blatantly undermines the rule of law by creating uncertainty about the long-term viability of business transactions. Granting the government such power will chill investment and disincentivize companies from engaging in legitimate transactions for fear the government could simply unwind the deals in the future. 

Google’s advertising business also provides significant value for American companies seeking to grow their companies and reach more consumers. Every day, billions of people worldwide use Google to search the internet. Google’s advertising program allows companies to match businesses with potential customers around the world, opening up a business to consumers who would otherwise be unaware of a good or service. Such reach allows businesses generate more revenue from a larger base of potential consumers.

In fact, according to Google, for every dollar spent on advertising on its platform, a company can generate $8 in profit that can then be reinvested into growing the company, developing new products and services, and employing workers. Penalizing Google for providing this valuable service would ultimately see businesses and consumers suffer.

For Google, a company that is no stranger to skepticism from Washington, the latest federal overreach ignores market realities, historical realities, and ignorance of the substantial benefits they provide for businesses and consumers. When skepticism is based on these factors, the antitrust division will trap the giant in a continuous cycle of litigation that corrupts the market and leaves those the DoJ seeks to protect vulnerable to higher prices and poorer service. 

Much like the movie, Google will be trapped in this cycle until Washington gets it right.