news/GOOGL/2023.01.24/U.S. targets Google's online ad business monopoly in latest Big Tech lawsuit.txt

WASHINGTON, Jan 24 (Reuters) - The U.S. Justice
Department accused Alphabet Inc's Google on Tuesday of
abusing its dominance in digital advertising, threatening to
dismantle a key business at the heart of one of Silicon Valley's
most successful internet companies.The government said Google should be forced to sell its ad
manager suite, tackling a business that generated about 12
percent of Google's revenues in 2021, but also plays a vital
role in the search engine and cloud company's overall sales."Google has used anticompetitive, exclusionary, and unlawful
means to eliminate or severely diminish any threat to its
dominance over digital advertising technologies," the antitrust
complaint said.Google, whose advertising business is responsible for about
80% of its revenue, said the government was "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 federal government has said its Big Tech investigations
and lawsuits are aimed at leveling the playing field for smaller
rivals to a group of powerful companies that includes Amazon.com
, Facebook owner Meta Platforms and Apple Inc
."By suing Google for monopolizing advertising technology,
the DOJ today aims at the heart of the internet giant’s power,"
said Charlotte Slaiman, competition policy director at Public
Knowledge. "The complaint lays out the many anticompetitive
strategies from Google that have held our internet ecosystem
back."Tuesday's lawsuit by the administration of President Joe
Biden, a Democrat, follows a 2020 antitrust lawsuit brought
against Google during the term of Donald Trump, a Republican.The 2020 lawsuit alleged violations of antitrust law in how
the company acquires or maintains its dominance with its
monopoly in online search and is scheduled to go to trial in
September.EIGHT STATES IN LAWSUITEight states joined Tuesday's lawsuit, including Google's
home state of California.California State Attorney General Rob Bonta said that
Google's practices have "stifled creativity in a space where
innovation is crucial."Colorado Attorney General Phil Weiser said that Google's
dominance had led to higher fees for advertisers and less money
for publishers with ad space to offer. "We are taking action by
filing this lawsuit to unwind Google’s monopoly and restore
competition to the digital advertising business," he said in a
statement.Google shares were down 1.9 percent on Tuesday.In addition to its well-known search, which is free, Google
makes revenue through its interlocking ad tech businesses. The
government asked for the divestiture of the Google Ad Manager
suite, including Google's ad exchange, AdX.Google Ad Manager is a suite of tools including one that
allows websites to offer advertising space for sale and an
exchange that serves a marketplace that automatically matches
advertisers with those publishers.Advertisers and website publishers have complained that
Google has not been transparent about where ad dollars go,
specifically how much goes to publishers and how much to Google.The lawsuit raises concerns about certain products in the ad
tech stack, where publishers and advertisers use Google's tools
to buy and sell ad space on other websites. That business was
about $31.7 billion in 2021 or 12.3 percent of Google’s total
revenue. About 70% of that revenue goes to publishers.An ad tech divestiture "may not be a game changer but it
could be sneaky important to Google's ad targeting capability,"
said Paul Gallant with the Cowen Washington Research Group."It connects to all of Google's other businesses and
ties them together. I think Google might be more concerned about
losing ad tech down the road than people might think," Gallant
said.The company made a series of purchases, including
DoubleClick in 2008 and AdMob in 2009, to help make it a
dominant player in online advertising.'PROJECT POIROT'While Google remains the market leader by a long shot,
its share of the U.S. digital ad revenue has been eroding,
falling to 28.8% last year from 36.7% in 2016, according to
Insider Intelligence.The Justice Department asked for a jury to decide the case,
which was filed in the U.S. District Court for the Eastern
District of Virginia.The lawsuit lays out a number of Google's attempts to
dominate the advertising market.The complaint discussed header bidding, which was a way that
companies could bypass Google to bid on ad space on websites.It lays out a series of projects including one dubbed
"Project Poirot" named after Agatha Christie’s master detective,
Hercule Poirot. The project "was designed to identify and
respond effectively to ad exchanges that had adopted header
bidding technology."The 149-page complaint said Google doubled down after
Project Poirot's initial success in manipulating its
advertisers' spending to reduce competition from rival ad
exchanges. Rivals AppNexus/Xandr lost 31% of DV360 advertiser
spending, Rubicon would lose 22%, OpenX would lose 42%, and
Pubmatic would lose 26%, the complaint said.(Reporting by Diane Bartz and David Shepardson; additional
reporting by Sheila Dang; editing by Chris Sanders and Grant
McCool)