A federal court held Thursday that Google created and sustained an illegal monopoly in key sectors of the online display-ads business, which could lead to the government forcing the tech giant to sell off much of its advertising operations.
“Plaintiffs have proven that Google has willfully engaged in a series of anticompetitive acts to acquire and maintain monopoly power in the publisher ad server and ad exchange markets for open-web display advertising,” Judge Leonie Brinkema concluded in a 115-page ruling (PDF) for the Alexandria division of the US District Court for the Eastern District of Virginia.
Those two markets occupy pivotal points in the programmatic advertising business, which puts most ads on websites, including this one.
Publisher ad servers like the one Google formerly called DoubleClick for Publishers (DFP), which holds about a 90% share of that market, connect to advertising sources to alert them of ad spots available on a site. Ad exchanges, such as the one Google called AdX, sit at the other side of that transaction, hosting near-real-time auctions among advertisers that result in bids sent to publisher ad servers. (Google has since retired the DFP and AdX names to brand its display-ads tech stack as Google Ad Manager.)
Judge Brinkema cites an expert estimate of a worldwide ad-exchange share of 54% to 65% for AdX (with the number-two exchange holding only 6%), which allowed Google to take a 20% cut of these auctions even as rivals would keep sometimes barely half as much.
This process works almost instantly but not always accurately, polluting legit sites with random schlock and sometimes placing ads from legit companies on junk sites.
The judge did not find an antitrust violation in Google originally buying third-party display-ad firms, with the assent of the Federal Trade Commission under multiple administrations. Under President George W. Bush, the FTC greenlit the DoubleClick acquisition that got it into the publisher ad server and ad exchange businesses, while under Obama it signed off on the company buying AdMeld to strengthen both of those efforts.
But Google then moved to shut out display-ad alternatives and give itself an unfair advantage through such self-dealing tweaks as “First Look” and “Last Look” bidding, resulting in it gaining effective control of both sides of this market. One Google employee compared that to Goldman Sachs or Citibank owning the New York Stock Exchange. Judge Brinkema found that it constituted three separate violations of the Sherman Act, the 1890 statute at the foundation of US antitrust law.
“For over a decade, Google has tied its publisher ad server and ad exchange together through contractual policies and technological integration, which enabled the company to establish and protect its monopoly power in these two markets,” she wrote. “In addition to depriving rivals of the ability to compete, this exclusionary conduct substantially harmed Google’s publisher customers, the competitive process, and, ultimately, consumers of information on the open web.”
Get Our Best Stories!
Your Daily Dose of Our Top Tech News
By clicking Sign Me Up, you confirm you are 16+ and agree to our Terms of Use and Privacy Policy.
Thanks for signing up!
Your subscription has been confirmed. Keep an eye on your inbox!
The judge rejected Google’s arguments that display ads should only be seen as a part of an overall advertising market in which Amazon and Meta also hold large shares, writing that web publishers can’t retreat to “walled-garden” sites because websites are essential components of their businesses.
Brinkema also pronounced herself unconvinced by plaintiffs’ claims that Google had monopolized a market for “advertiser ad networks,” writing in the ruling that they had failed to establish that such a distinct market exists.
Then-US Attorney General Merrick Garland and a bipartisan group of eight states filed this case in January 2023 in a complaint (PDF) that sought “structural relief” starting with the forced divestiture of the Google Ad Manager suite, DFP and AdX included.
A Long Road Ahead
Brinkema’s ruling closes with instructions to Google and the plaintiffs to present proposals for remedies. Expect that phase to take a great deal of time: The European Commission came to a similar conclusion about Google’s display-ads business in June 2023, but that case has yet to result in forced spinoffs.
Recommended by Our Editors
Google said it would appeal the opinion not on its own blog but in a post on X from its @NewsFromGoogle account in which it suggested it had won half the case (Brinkema found for the plaintiffs on three of their five claims).
“We disagree with the Court’s decision regarding our publisher tools,” the post quoted Lee-Anne Mulholland, vice president of regulatory affairs. “Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.”
The head of an association of online news publishers applauded the opinion in his own statement, posted on X and on Bluesky. Jason Kint, CEO of Digital Content Next, wrote that Google’s “clear pattern of anti-competitive behavior” had “deprived premium publishers worldwide of critical revenue, undermining their ability to sustain high-quality journalism and entertainment.”
This case represents Google’s second large-scale antitrust setback. Last August, Judge Amit Mehta wrote for the US District Court of the District of Columbia in an opinion finding that Google’s search business represented an illegal monopoly.
That case is now moving on to discussing remedies as well, with the federal and state AGs who filed this antitrust suit in October 2020 seeking such fixes as mandatory licensing at “marginal cost” of Google’s search data to competing search engines, a ban on browser-default deals like Google’s arrangement with Apple, and a sale of Chrome.
About Rob Pegoraro
Contributor
