Last week, The US Department of Justice (DoJ) and eight US states sued tech giant Google, alleging that it’s using monopoly power to suppress competition in the world of open web display advertising, reports Mobiledevmemo.
In its complaint, the DOJ alleges that Google has utilised M&A transactions and other tactics to prevent meaningful competition in these markets, allowing Google to charge higher rates for its services. The DOJ claims that this has harmed advertisers, publishers, and consumers alike.
“Google abuses its monopoly power to disadvantage website publishers and advertisers who dare to use competing ad tech products in a search for higher quality, or lower cost, matches,” reads the complaint.
”Google uses its dominion over digital advertising technology to funnel more transactions to its own ad tech products where it extracts inflated fees to line its own pockets at the expense of the advertisers and publishers it purportedly serves…The harm is clear: website creators earn less, and advertisers pay more, than they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative ad tech tools that would ultimately result in higher quality and lower cost transactions for market participants.”
The downfalls of a monopoly
The DOJ alleges that Google’s unique access to demand has allowed to lock publishers into its publisher ad service, giving its own ad exchange network AdX privileged access to publisher inventory. These tactics, the DOJ claims, lets Google charge what it calls supra-competitive rates, and demand for Google’s services has been artificially inflated due to the suppression of competitors.
The DOJ has identified ten points of conduct which it states highlight Google’s use of monopoly power to create an unfair environment. These include the acquisition of DoubleClick in a bid for market dominance, the use of Project Bell to lower bids to publishers partnering with competitors without the permission of advertisers, and the restriction of Google Ad’s advertiser demand to AdX.
Monopolies have become an increasing cause for concern in recent years, with regulators worldwide examining how the behaviour of market leaders can affect not only competitors but consumers.
Last year, Microsoft’s attempted acquisition of Activision Blizzard drew the attention of regulators worldwide, with the FTC suing to block the deal in December.