Feds, Google continue sparring match over tech monopoly suit

ALEXANDRIA, Va. (CN) — The U.S. Department of Justice on Tuesday pressed its argument in favor of breaking up what it describes as Google’s monopoly on the digital advertising market.

The federal government for months has been locked in an antitrust battle against the technology giant. In its Eastern District of Virginia lawsuit, the Justice Department contends that Google has engaged in anticompetitive practices by cornering the market on ad sales and dictating the rules by which its customers purchase advertising space for websites.

With closing arguments in that case just weeks away, the government doubled down on its arguments in a lengthy filing wrapping up its interpretation of the trial.

“Google is a monopolist illegally wielding control over the ad tech tools that make the free and open internet possible,” Justice Department attorney Jessica Aber wrote in the 422-page proposed factual and legal findings.

“Rather than compete on the merits by building better or lower-priced products for its customers, Google has used its dominance in three separate ad tech product markets to exert control over its customers, its competitors and the very ruled by which open-web display ads are bought and sold billions of times every day.”

Evidence presented at trial demonstrated an “intentional” campaign by the tech company to dominate the digital ad sector and gain monopolistic control over advertising servers, the ad network and the exchange through which advertisers and customers connect.

But in a separate filing Monday, Google countered that there was a “vast delta” between the government’s claims and the evidence it provided. Instead, the company said, the court heard about a “vibrant and continually evolving competitive landscape” in which an array of ad tech players compete for business in a “two-sided” market that connects customers to advertisers.

The Justice Department pointed to more than a decade of business acquisitions through which Google acquired DoubleClick, the web’s largest ad server, and a “nascent” ad exchange known as AdX. The company then tied those two mechanisms to its own existing advertiser network, which — in the view of the department and according to witnesses it called at trial — forced customers into using Google’s own ad tech tools rather than those of competitors.

This in turn diminished the scale and effectiveness of potential rivals, the government says, cementing Google’s monopoly in the space.

Google, the Justice Department added, chose on more than one occasion to limit its ad functionality to keep advertisers “stuck” with its products, and altered the mechanics of display ad transactions to put Google products at an unfair advantage compared with potential competitors.

“Rival ad exchanges cannot compete effectively even if they offer better prices or higher quality prices because they cannot offer publishers access to Google Ads advertiser demand,” the agency wrote Tuesday. “This has diminished those rivals’ scale and their ability to use that scale to further improve their products.”

The government claims Google’s conduct has allowed it to overcharge for its services.

Google has argued that there are viable alternatives to its ad services, such as social media company Meta, and says the federal government has misrepresented the advertising market. The company’s ad exchange, it argued, is a “two-sided” market through which buyers and sellers both operate — a model some economists argue promotes healthy competition rather than exclusion.

“The constrained digital advertising ecosystem described in Plaintiffs’ complaint bears little resemblance to the real-world marketplace described in the testimony of those who know it best,” the company wrote Monday.

The Justice Department, Google said, ignored alternative advertising options, such as in-house technologies offered by Amazon, Facebook and TikTok, to artificially inflate the firm’s share of the ad market. Google made less than half of all display advertising transactions between 2008 and 2022, the company pointed out.

And the federal government is unfairly enforcing antitrust laws against the company, Google said at trial, and hadn’t adequately demonstrated that its control of ad tools harmed consumer choice.

The advertising market, Google said in its filing, has grown faster than the company’s ad revenue, thanks in part to increased competition from rivals such as Microsoft and Amazon. Contrary to the Justice Department’s claims about pricing, Google added, its advertising costs are “in line with or lower than rivals” and have remained flat or decreased over time. The government’s contention was based on just one segment of the market, the company said.

Google further sought to pour cold water on the idea that it intentionally degraded the quality of its ad tools as a way to promote anticompetitive behavior, arguing that its conduct fell under its legal ability to refuse to deal with direct competitors.

“Plaintiffs’ claim that a product did not work as rivals wanted is no rebuttal to significant evidence of substitution between products within and without Plaintiffs’ product market,” the company said.

The Justice Department, meanwhile, argued that the tech titan failed to call as trial witnesses any independent customers who were helped by Google’s control over digital advertising services, adding that the dearth “speaks volumes.”

“Rather than meaningfully contradict Plaintiffs’ evidence of Google’s anticompetitive conduct or to satisfy its burden to justify its conduct, Google proffered self-serving, post-hoc justifications for its conduct that were unsupported by the evidence — even its own documents — and insufficient under the law,” the agency wrote.

The Justice Department has asked the court to rule that Google’s conduct violated the Sherman Antitrust Act.

“Google’s sustained, decadelong course of anticompetitive conduct is inimical to a vibrant, open internet and is illegal,” the agency said. “Google extracted extraordinary fees at the expense of the website publishers who make the open interned vibrant and valuable. This included newspapers, popular websites and thousands of other content creators.”

Dozens of advertising agencies and even news organizations such as The New York Times and the Daily Mail are listed as third parties in the Justice Department’s suit.

Closing arguments in the case are set for Nov. 25 before U.S. District Judge Leonie Brinkema, a Bill Clinton appointee who has been on the federal bench since 1993.

Along with the federal challenge over digital advertising, Google is also staring down the barrel of two other lawsuits seeking to break up its hold on major internet functions. The Justice Department and video game firm Epic Games have sued Google in Washington, D.C., and San Francisco over claims it has monopolized internet searches and digital app markets such as its Google Play Store.

Following a judge’s finding in the Washington case that Google acted as a monopolist, the Justice Department has suggested that the court could force Google to divest from several of its major businesses, including the Play Store or the Android mobile operating system. Google says that the agency’s proposal is “radical” and exceeds the legal boundaries of the case.

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