US sues Alphabet's Google over Advertising dominance

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US sues Alphabet's Google over Advertising dominance

The US Justice Department filed a lawsuit against Alphabet's Google on Tuesday over allegations that the company abused its dominance of the digital advertising business.

The government said in its antitrust complaint that Google has been using anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies.

The Justice Department asked the court to compel Google to divest its AdX suite, including its Google Ad Manager suite.

Google is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow. The lawsuit is the second federal antitrust complaint filed against Google, alleging violations of antitrust law in how the company acquires or maintains its dominance. The Justice Department lawsuit filed in 2020 against Google focuses on its monopoly in search and is scheduled to go to trial in September.

Eight states joined the department in the lawsuit filed on Tuesday, including Google's home state of California.

Google's shares were down 1.6 per cent on Tuesday.

The lawsuit is about Google's business, which is responsible for 80 per cent of its revenue, and represents the latest swipe at Big Tech's market power by the administration of US President Joe Biden, a Democrat. The lawsuit brought in 2020 was brought by Biden's predecessor Donald Trump, a Republican.

Google is the market leader by a long shot, but its share of the US digital ads revenue has fallen to 28.8 per cent last year from 36.7 per cent in 2016 according to Insider Intelligence.

The Justice Department asked for a jury to decide the case, which was filed in the US District Court for the Eastern District of Virginia.

The lawsuit lays out a number of Google's attempts to dominate the advertising market, with the government saying that the company has the technology to quash the threat. The complaint was about header bidding, which was a way that companies could bypass Google to bid on ads on websites.

It lays out a series of projects including one named Project Poirot named after Agatha Christie's master detective, Hercule Poirot. The goal was to identify and respond effectively to ads that had adopted header bidding technology. The 149-page complaint said that Google doubled down after Project Poirot's initial success in manipulating advertising spend in order to reduce competition from rival ads exchanges. The complaint said that Rivals AppNexus Xandr lost 31 per cent of DV 360 advertiser spending, Rubicon would lose 22 per cent, OpenX would lose 42 per cent and Pubmatic would lose 26 per cent.