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Google must face states’ antitrust claims

Internet search giant Google must face the bulk of ad-buying monopoly claims brought by sixteen states and Puerto Rico, a New York federal judge ruled.

MANHATTAN (CN) — Google must face a multistate digital advertising antitrust suit, a New York judge ruled Tuesday after refusing to dismiss most monopoly claims against the search giant.

“The court ultimately concludes that the states have plausibly alleged that Google has monopoly power in and willfully engaged in anticompetitive conduct, i.e., conduct that harms competition in the markets for ad exchanges, ad-buying tools for small advertisers and publisher ad servers,” U.S District Judge P. Kevin Castel ruled in a 92-page opinion Tuesday evening. “Thus, the states plausibly allege facts that state a claim for monopolization in these markets,” the judge wrote in allowing the bulk of antitrust counts against the tech giant to proceed, though he dismissed one claim against Google.

A group of ten state attorneys general led by Texas initially filed an antitrust lawsuit against Google in the Eastern District of Texas in December 2020, claiming the company struck an unlawful agreement with Facebook to manipulate advertising auctions.

One of the most profitable companies in the world with a market capitalization of around $900 billion, Google, whose parent company is Alphabet, controls about 90% of all internet searches.

The search giant sought to dismiss the case, arguing that all of the conduct targeted in the states’ lawsuit are legal business practices.

The multidistrict case has since been transferred to the Southern District of New York, where a third amended complaint was filed on behalf of sixteen states and the Commonwealth of Puerto Rico.

The states alleged in their complaint that Google entered into a secret bidding agreement, codenamed Jedi Blue, to deliberately give its largest rival, Facebook, advantages on the advertising exchange it operates to buy and sell online advertisements. In exchange for the leg up, Facebook backed out of plans to adopt competing tech that would have challenged Google’s online advertising monopoly.

But Castel, a George W. Bush-appointee, dismissed that claim, writing in his opinion, “there is nothing inexplicable or suspicious” about what led the two tech giants to enter into the agreement.

The states’ lawsuit also claims Google forced online publishers to license its software to do business with over 1 million advertisers who used it as their middleman.

According to the lawsuit, Google started to form its monopoly in 2008 when it acquired DoubleClick, a leading provider of ad tools that online publishers use to sell their advertising inventory on exchanges.

"Google started requiring publishers to license Google’s ad server and to transact through Google’s exchange in order to do business with the one million plus advertisers who used Google as their middleman for buying inventory," the lawsuit states.

The states say Google used its position to extract fees from both ad buyers and sellers, then charged an even larger fee for transactions to clear its exchange. Google then tightened its influence on publishers by imposing a one-exchange rule that barred them from routing ad inventory to more than one exchange at a time, according to their initial complaint.

Castel’s ruling on Tuesday was filed shortly before the European General Court dealt Google another blow across the Atlantic, ordering the company to pay $4.2 billion for abusing its dominance in the smartphone market to promote other Google products, such as Google Search and the Chrome browser.

The fine is one of three antitrust penalties totaling more than $8 billion that the European Commission slapped on Google between 2017 and 2019, putting the 27-nation bloc at the forefront of the global push to rein in tech giants.

Representatives for Google did not immediately respond to requests for comment on Wednesday.

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