(CNN) – Google suffered what may be its biggest court defeat in the company’s history this summer when a federal judge deemed its flagship search engine a illegal monopoly siding with state and federal officials.
Now, the Justice Department hopes to get a double benefit when it goes to trial against Google once again this week, this time, in a separate antitrust case that could potentially reshape some of the most basic economics of running a website.
The expected confrontation that begins this Monday will pit the United States Government and more than a dozen states against another important source of Google’s economic power: its enormous advertising business.
Specifically, the high-stakes legal battle focuses on the $31 billion portion of Google’s advertising business, which connects website publishers with advertisers and determines which banner ads appear on countless sites around the world. grid. When an Internet user visits a publisher’s website, for example, it’s often Google working behind the scenes while the page loads. The company runs billions of real-time auctions a day, in fractions of a second, to determine which ads to show where.
Google’s search engine may have been the revolutionary app that made it a daily destination for millions of consumers, but it was the company’s advertising technology that helped Google monetize much of the rest of the web, and Google took illegal measures to thwart competition in that space, according to the states and the Department of Justice.
Governments allege that Google raised prices for advertisers and reduced website revenue, either by absorbing ad technology rivals through anti-competitive mergers, or by intimidating companies into using the products Google advertising or by controlling key companies in each part of the advertising supply chain.
The complaint even names the US Army as one of the advertisers allegedly harmed by Google’s practices. The US government has spent $100 million since 2019 buying online ads, according to the lawsuit.
Authorities have called for dismantling Google’s alleged monopoly on advertising technology (which is distinct from the search or search ads business).
It is the second of two challenges the Justice Department has filed against Google’s power since the Trump administration, and the latest evidence of the United States’ renewed commitment to enforcing the country’s competition laws. But for Google, which has denied monopolizing the ad tech industry, the case is an attack on what it says are essential tools for small businesses and publishers.
Google described the online advertising industry as vibrant and competitive, calling the Government lawsuit filed last year as a misguided attempt to pick winners and losers.
In its court filings, Google argued that the Justice Department’s lawsuit focuses too much on website advertising. Google competes with hundreds of companies that offer their own ad exchanges or ad tech tools, including Amazon, Meta, Microsoft and TikTok, to name a few, according to its filings. Advertisers can choose whether to use Google tools or rival tools, or even divert ad spend from websites to other formats and platforms that do not involve Google ad technology, such as Instagram or Netflix.
“As applications become more important to digital content providers,” Google wrote in a pretrial filing “the amount of inventory they sell through apps and the spending on ad technology to manage that inventory increases.”
Both sides will make their opening statements Monday before District Judge Leonie Brinkema of the United States District Court for the Eastern District of Virginia. Brinkema, a Clinton appointee, is a former Justice Department attorney who, as a judge, has also presided over numerous cases involving terrorism and immigration.
The trial, which will last several weeks, could include testimony from prominent Google partners as well as its critics. The list of potential witnesses includes current or former executives from Comcast, Disney, Gannett, The New York Times and Meta, along with some high-ranking Google employees, such as YouTube CEO Neal Mohan.
In an Alexandria courtroom, across the Potomac River from the U.S. Capitol, government lawyers are expected to argue that, among other things, Google’s control of technologies that serve advertisers and publishers, along with an advertising exchange where advertising offers occur, creates conflicts that encourage Google to negotiate with its own interests.
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“In effect, Google positioned itself to function simultaneously as a buyer, seller and auctioneer of digital display advertising,” the statement states. 2023 demand.
That deal has hurt publishers and advertisers worth hundreds of millions of dollars in additional fees since 2019, according to estimates contained in a Justice Department pretrial filing.
For its part, Google has argued in its filings that the price of advertising continues to fall across the industry and that its own market share in the display advertising market has been “consistently declining since 2013.”
It’s unclear what specific penalties Google could face if Brinkema ultimately reaches a settlement with the Justice Department. The trial that begins this Monday is just a first step in determining whether Google violated the law. Still, a split of Google’s ad tech business could trigger a shakeup of the digital advertising industry and Google’s role in it.
The US government believes a split would create new or different financial incentives for everyone in the market, but Google has argued that it could instead hurt smaller websites that rely on its tools or simply benefit other big giants. established in the digital advertising industry.
