The Justice Department has launched a trial against Google, accusing the tech giant of monopolizing the online advertising technology sector. The proceedings are taking place before U.S. District Judge Leonie Brinkema in Alexandria, Virginia.
Allegations of Market Control
Government prosecutors contend that Google exerts substantial control over the technological ecosystem that enables the distribution of news and information on the web. They note that Google manages over 150,000 online ad sales transactions per second, highlighting its significance in the market.
Julia Tarver Wood from the Justice Department's antitrust division argues that Google employs traditional monopoly strategies. These include purchasing competitors, ensuring customer fidelity, and dominating ad market transactions. Wood clarifies that the concern is not Google's size per se, but its use to suppress competition.
Defense Claims Outdated Facts
Karen Dunn, Google's chief attorney, contends that the Justice Department's assertions are based on obsolete information. She maintains that Google's tools now integrate well with those of rivals and that Google faces stiff competition from other major players such as Amazon and Comcast, especially as digital ad spending shifts to apps and streaming services.
This trial follows two major defeats for Google, affirming its monopolistic status in general search and the Android app store. According to Wood, Google enjoys a “trifecta of monopolies,” using advanced tools to influence publishers, advertisers, and brokers. The DOJ alleges this control enables Google to claim about 30 cents of every advertising dollar, escalating costs for advertisers and reducing earnings for content creators.
Witnesses and Trial Duration
The Justice Department intends to present several publishers as witnesses, including representatives from USA Today, News Corp., and the Daily Mail. The trial is projected to last between four and six weeks, potentially making it one of Google's most impactful monopoly cases.
The DOJ aims for remedies that might include divesting Google's Ad Manager suite. Experts believe that this case could result in the separation of Google's search and advertising divisions, impacting the company's business structure significantly.
Dunn likened the DOJ's evidence to outdated relics such as a BlackBerry or a Blockbuster card, characterizing the case as a “time capsule.” Following her opening remarks, she left to assist with Vice President Kamala Harris' preparations for a televised debate.
Ongoing Legal Issues in the US
Google is also going through legal problems in the United States. US courts in August found Google guilty of monopolistic practices. Among the potential outcomes from the ruling could be to break up the company.
The decision for the wider DoJ investigation was made last September and could have a huge impact on Google and its parent Alphabet. Last year, the DoJ accused the company of destroying evidence by deleting chats between employees. In November 2022, Google agreed to pay hundreds of millions of dollars to 40 states in the biggest anti-trust settlement in U.S. law.
Google argued that the failure of rivals such as Microsoft Bing was not down to its own practices but rather the failures of Microsoft. The trial also looked into Google's search ad practices. As we reported in September, the DOJ alleges that Google's market dominance allows it to hike ad prices without significant consequences. This claim is substantiated by Jerry Dischler, a Google ads executive, who testified about the company's ad pricing strategies.
Big Tech Search Battle
Alphabet CEO Sundar Pichai and Microsoft CEO Satya Nadella have both given testimonies during the landmark trial. In his testimonies to the court, Microsoft CEO Satya Nadella suggested Google stifles Bing. Nadella revealed that Microsoft has poured a staggering $100 billion into Bing, its proprietary search engine. Nadella candidly admitted Microsoft's unsuccessful attempts to dethrone Google from this position, even after offering Apple more favorable terms.
Google reportedly pays Apple up to $20 billion per year to keep its Search engine on iPhone and other devices. However, Pichai claims this drives competition not blocks it. He reasoned that the cost-effectiveness of contending with a potential Apple-powered rival search engine or another competitor weighed in favor of retaining Google's default status on iPhones.
One option under consideration is the separation of Google's Android operating system and the Chrome browser. Android, which powers around 2.5 billion devices worldwide, is frequently mentioned in these conversations. The widely-used Chrome – the dominant web browser on the market – is also being examined.
Ongoing Lawsuits and Legal Issues
A class action lawsuit against Google has been reinstated by the U.S. Court of Appeals for the 9th Circuit in August, involving claims from Chrome users who allege improper data collection practices. Initially filed in 2020, the lawsuit accuses Google of collecting personal data from Chrome users without obtaining explicit consent.
According to the lawsuit, Google allegedly gathered various types of personal data, such as browsing history, IP addresses, and browser identifiers, without explicit permission. Central to these allegations is the Chrome sync feature, which stores bookmarks, passwords, and other data to users' Google accounts.
Also in August 2024, Yelp filed a lawsuit against Google in the US, claiming unfair search practices. Yelp contends that Google maintains its local search monopoly by prioritizing its vertical over competitors, thereby stifling competition and degrading the quality of local search services. Yelp argues that steering users to its own local search results through its general search engine results page is an illegal tying of separate products, hampering rival companies from growing their user base.
European Regulators Refuse Fine Appeal
As I reported today, European courts have upheld a 2017 multi-billion-dollar fine given to Google for monopolistic shopping practices on Android. The European Commission initiated proceedings against Google in 2017, alleging that the company had abused its dominant position in the online search market by favoring its own products over competitors. The General Court of the European Union upheld the Commission's decision, finding that Google's actions had restricted competition and harmed consumers.
The Commission's investigation revealed that Google had systematically promoted its comparison shopping service in search results while demoting those of competitors. This behavior was deemed to be a violation of EU antitrust rules, as it distorted competition and limited consumer choice.
Google has consistently denied the allegations, claiming that its actions were justified by a legitimate business interest in enhancing user experience. However, the Court of Justice found these defenses to be insufficient.
The ruling is expected to have far-reaching consequences for Google and other tech companies operating in the European Union. It signals the EU's commitment to enforcing antitrust laws and preventing dominant companies from abusing their market power.
Google is no stranger to major fines in Europe. In 2022 Google was fined $5 billion by regulators in Europe. The Commission says the fine regards three restrictions Google placed on Android device OEMs. Under European laws the restrictions break antitrust regulations. Last year, Google paid a fine of $1.69 billion by the European Commission over allegations of market abuse.
