US government set to sue Google in fifth major case challenging firm’s paid advertising practices

Paid Media

The US Justice Department are ready to sue Alphabet’s Google by the end of the week over the tech giant’s dominance within the digital advertising market, according to a report today from Bloomberg.

This will be the second lawsuit the Department of Justice have taken against Google, who are currently leaders in the $627bn global digital market, according to 2023 estimates by research firm eMarketer.

The gatekeeper to the internet

Google is one of the wealthiest companies on the planet. With a market value of $1 trillion, the tech giant is the gatekeeper to the internet for billions of users and advertisers across the globe. For years, Google has accounted for almost 90% of all search queries in the US and has used anticompetitive tactics to maintain and extend its dominance in search and search advertising.

Publishers site lack of transparency

This is the fifth major case in the US that challenges Google’s business practices. The latest lawsuit is expected to focus on Google’s advertising business, which brings in around 80% of the firm’s revenue. As well as its free search function, Google makes revenue through its connecting ad tech businesses, which link advertisers with newspapers, websites and other companies looking to host them.

Advertisers and website publishers have complained that Google has not been transparent about where ad dollars go, specifically how much goes to publishers and how much to Google. In court filings and congressional testimony, the company has stated its rivals include other major players in the ad tech market such as Amazon, Meta Platforms and Microsoft.

Android mobile platform in violation of antitrust laws

The DOJ first filed a lawsuit against Google in 2020, citing the company had an unfair monopoly over search and search-related advertising. It was argued that Android phone manufacturers were forced to set Google as the default search engine, preventing them and other rivals from gaining traction, and ensuring Google would earn a huge sum of money from search-related advertising.

The Justice Department didn’t immediately respond to a request for comment, and Google have declined to comment.

In August, Google spokesman, Peter Schottenfels defended the company’s ad business in a statement to Bloomberg saying: “Our advertising technologies help websites and apps fund their content and enable small businesses to reach customers around the world. The enormous competition in online advertising has made online ads more relevant, reduced ad tech fees, and expanded options for publishers and advertisers.”

Why does this matter?

The company’s ad practices are not just under scrutiny in the US, but in many other parts of the world. In 2022, the European Commission also started looking into whether Google limits rival services’ access to user data for ad purposes. Responding to the EU’s concerns, Reuters reported in June that Google may let rival ad platforms run ads on YouTube.

Alphabet’s advertisement operations are expected to bring in $74 billion in US digital ad revenue in 2023.