US Department of Justice Files Another Antitrust Lawsuit Against Google for "Illegal Dominance in Digital Advertising" (Update)

From the Beginning of the Year, Regulatory Scrutiny Sharpens on Big Tech
Bloomberg Recalls the 1980s Bell Telecom System Breakup Case

[Asia Economy Reporter Kwon Haeyoung] The U.S. Department of Justice filed an antitrust lawsuit against Google on the 24th (local time), accusing the company of illegally abusing its dominance in the digital advertising market and hindering fair competition. This lawsuit is the second antitrust case filed by the U.S. federal government against Google, with regulatory scrutiny from U.S. authorities targeting big tech since the beginning of the year.

Merrick Garland, the U.S. Attorney General, announced at a press conference held in Washington D.C. that Google was sued for violating antitrust laws. Eight states including New York, California, and Virginia also joined the lawsuit.

In the complaint submitted to the U.S. District Court for the Eastern District of Virginia in Alexandria, the Department of Justice stated, "Google has used anticompetitive, exclusive, and illegal means to eliminate or weaken threats to its dominance in digital advertising technology." It added, "This is clearly harmful. Website creators earn less, and advertisers pay more. This prevents unrestricted competitive pressure from determining prices, leading to innovative advertising technologies that ultimately improve quality and reduce costs."

The Department of Justice requested the court to remove Google's advertising management platforms, such as the ad exchange, from the market.

[Image source=Yonhap News]

Google is the dominant player in the U.S. digital advertising market, valued at $278.6 billion. Google controls most of the technology required to buy, sell, and deliver online ads. According to U.S. market research firm eMarketer, Google is expected to generate $65.7 billion in revenue this year in the U.S. digital advertising market, holding a 26.5% market share, ranking first. YouTube is separately expected to earn 2.9% of advertising revenue. This is higher than Meta (18.4%) and Amazon (11.7%). The Department of Justice pointed out that Google takes at least $0.30 of every dollar advertisers spend on online advertising tools.

Google issued a statement regarding the Department of Justice's antitrust lawsuit on digital advertising, criticizing it as "pushing false claims that (its digital advertising business) slows innovation and raises advertising costs." Following the news of the antitrust lawsuit, Alphabet, Google's parent company, saw its stock price fall more than 2% in the stock market that day.

Bloomberg analyzed, "This lawsuit is the Biden administration's first major case challenging the power of the largest U.S. tech companies, following investigations initiated during the Donald Trump administration," adding, "It is one of the few cases since the breakup of Bell Telecom Systems in the 1980s where the Department of Justice has demanded the breakup of a major company." The Department of Justice's lawsuit recalls the case where AT&T, the largest U.S. telecommunications company, was forced to split into seven companies under antitrust laws in 1984.

The Biden administration has been driving strong regulatory efforts to curb big tech monopolies since its inception. It appointed Lina Khan, a Columbia Law School associate professor known as the "Big Tech Reaper," as chair of the Federal Trade Commission (FTC), and has called for bipartisan cooperation to prepare big tech reform and regulatory bills since the beginning of the year. On the 11th, President Joe Biden emphasized in an op-ed for the Wall Street Journal (WSJ) that both parties should work together to establish big tech regulatory legislation to protect privacy, women's and children's rights.