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Friday, January 27, 2023

DOJ sues to split Google’s ad business

The US Department of Justice has moved forward with a lawsuit that seeks to force Google to divest a significant portion of its advertising business, a move that would have huge knock-on effects on the advertising industry.

The lawsuit, filed on Tuesday (January 24), argues that Google has “corrupted legitimate competition” in the ad-tech industry by “taking control” of the vast array of tools that facilitate digital advertising.

Google is the only technology provider in the entire ad technology supply chain that also sells ad inventory on its own properties.

The lawsuit accuses Google of abusing its “monopoly power” to hurt publishers and advertisers who use competing ad technology products.

He said Google’s conduct means creators and publishers earn less and advertisers pay more than they would in a more competitive market.

“This conduct hurts all of us,” the lawsuit says.

Eight states (California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia) also signed the lawsuit.

The Justice Department calls for, “at a minimum,” the sale of the Google Ad Manager suite, including DoubleClick for Publishers (DFP) and Ad Exchange AdX.

The lawsuit also requests that Google pay damages for violating antitrust laws.

This lawsuit has been in the works for some time. Google offered a series of concessions to its advertising business last year, including turning parts into a separate company under parent Alphabet and opening up YouTube’s inventory to outside sellers, to avoid a potential Justice Department lawsuit.

It is the latest attempt to break up Google’s more than $150 billion advertising business, a source of controversy in the industry for many years.

A group of US senators introduced a bill last May that would prohibit companies that process more than $20 billion per year in digital advertising transactions from participating in more than one part of the digital advertising ecosystem.

Google’s ad tech dominance is also being scrutinized in Australia and Europe.

Arielle Garcia, UM’s director of privacy, said USA Campaign: “The DOJ lawsuit against Google is not unexpected, it illustrates the international regulatory scrutiny sustained on platforms, as we have seen with the EU Digital Markets Law. Greater competition and greater transparency are critical to a healthy digital ecosystem and would benefit sellers and consumers alike.”

The DOJ also sued Google in 2020 for alleged anti-competitive tactics in its search business. The case, which centers on how Google is the default search engine on numerous browsers and phone makers, is still ongoing.

This article originally appeared on Campaign US.

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