CNN
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Google was handed what may be its biggest court defeat in company history this summer when a federal judge deemed its flagship search engine an illegal monopoly, siding with state and federal officials.
Now, the Justice Department is hoping for a twofer as it goes to trial against Google once more this week — this time, in a separate antitrust case that could potentially reform some of the most basic economics of running a website.
The long-awaited showdown beginning Monday will see the US government and more than a dozen states challenging another major source of Google’s economic might: its massive advertising business.
Specifically, the high-stakes legal battle focuses on the $31 billion portion of Google’s ad business that matches website publishers with advertisers and determines what banner ads appear on countless sites across the web. When an internet user visits a publisher’s website, for example, it is often Google that works behind the scenes while the page loads. The company runs billions of real-time auctions a day, within fractions of a second, to figure out whose ads to show where.
Google’s search engine may have been the killer app that made it a daily destination for millions of consumers, but it was the company’s advertising technology that helped Google monetize much of the rest of the web — and Google took illegal steps to thwart competition in that space, according to the states and DOJ.
From gobbling up ad-tech rivals through anticompetitive mergers to bullying businesses into using Google’s ad products, to controlling key businesses in each part of the advertising supply chain, the governments say, Google drove up prices for advertisers and choked off revenue for websites.
The complaint even names the US Army as one of the advertisers allegedly harmed by Google’s practices. The US government has spent $100 million since 2019 on buying internet ads, according to the lawsuit.
Authorities have called for Google’s alleged ad-tech monopoly – which is distinct from Google’s search or search ads business – to be broken up.
It’s the second of two DOJ challenges to Google’s power since the Trump administration, and the latest test of a renewed US commitment to enforcing the nation’s competition laws. But for Google, which has denied monopolizing the ad tech industry, the case is an assault on what it says are essential tools for small businesses and publishers.
Google has described the online advertising industry as vibrant and competitive, calling the government suit filed last year a misguided attempt to pick winners and losers.
In its court filings, Google has argued the DOJ suit focuses too narrowly on website advertising. Google competes against hundreds of companies that offer their own ad exchanges or ad tech tools, including Amazon, Meta, Microsoft and TikTok to name a few, according to its filings. Advertisers can choose whether to use Google’s tools, or rival tools, or even divert ad spend away from websites and to other formats and platforms that don’t involve Google’s ad tech, such as on Instagram or Netflix.
“As apps become more important to digital content providers,” Google wrote in a pre-trial filing, “the amount of inventory they sell through apps, and ad tech spending to manage that inventory, increases.”
Both sides will make opening statements Monday before District Judge Leonie Brinkema of the US District Court for the Eastern District of Virginia. A Clinton appointee, Brinkema is a former Justice Department attorney who, as a judge, has also presided over numerous terrorism- and immigration-related cases.
The multi-week trial could feature witness testimony from high-profile partners of Google as well as its critics. The list of potential witnesses includes current or former executives from Comcast, Disney, Gannett, The New York Times and Meta, along with some high-ranking Google employees, such as YouTube CEO Neal Mohan.
In an Alexandria courtroom across the Potomac River from the US Capitol, government lawyers are expected to argue that, among other things, Google’s control of technologies that serve advertisers as well as publishers, along with an ad exchange where advertising bids occur, creates conflicts that encourage Google to self-deal.
“In effect, Google positioned itself to function simultaneously as buyer, seller, and auctioneer of digital display advertising,” the 2023 lawsuit said.
That arrangement has harmed publishers and advertisers to the tune of hundreds of millions of dollars in extra fees since 2019, according to estimates in a pre-trial filing by DOJ.
For its part, Google has argued in its filings that the price of advertising continues to fall industry-wide and that its own market share in the display advertising market has been “steadily declining since 2013.”
It’s not certain what specific penalties Google could face if Brinkema ultimately agrees with the DOJ. The trial beginning Monday is merely a first step to determine whether Google broke the law. Still, a breakup of Google’s ad tech business could potentially trigger a shakeup of the digital advertising industry and Google’s role within it.
The US government believes a breakup would create new or different financial incentives for everyone in the market. But Google has argued it might instead harm smaller websites that rely on its tools, or merely serve to benefit other large, established giants in the digital ad industry.
