What US judge’s ruling that Google has illegal advertising monopoly means

Google’s woes are on the rise after a judge in the United States ruled the search giant has a monopoly in online advertising technology. The landmark case is likely to reshape the digital ad market.

In 2023, America’s Department of Justice, along with 17 US states, sued Google, accusing the tech giant of illegally dominating the advertising technology and quashing competition. A federal judge in Virginia has now sided with the Justice Department’s case.

Let’s take a closer look.

The antitrust case against Google

The US Justice Department’s lawsuit accused Alphabet’s Google of influencing the technology that determines the placement of adverts online, where and at what cost.

The case concerns Google Network, a division of the tech giant that deals with advertisers’ purchase of digital ad space.

Federal prosecutors argued that Google’s growing control over the ad tech helped it illegally stave off competition that hurt web publishers, such as news outlets, reported Reuters.

The antitrust suit alleged that Google wielded its power over the digital ecosystem to force advertisers to use its products, making it difficult to use competitors’ services.

The US tech giant’s ad tech business generated $31 billion in revenue last year – a 10th of the company’s overall sales, as per Wall Street Journal (WSJ).

The US judge’s ruling

A federal judge on Thursday (April 17) ruled that Google illegally dominated two markets for online advertising technology.

Judge Leonie Brinkema of the US District Court for the Eastern District of Virginia ruled the tech giant violated antitrust law.

She found Google guilty of “willfully acquiring and maintaining monopoly power” in two markets for advertising technology — publisher ad servers and the market for ad exchanges.

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“In addition to depriving rivals of the ability to compete,” the judge wrote in her ruling, “this exclusionary conduct substantially harmed Google’s publisher customers, the competitive process, and, ultimately, consumers of information on the open web.”

Brinkema agreed with the US Justice Department’s argument that the tech giant, by “tying” together its publisher ad server and ad exchange, was able to “establish and protect its monopoly power in these two markets,” reported CNN.

However, she dismissed the US government’s third count against Google related to its online advertiser ad networks.

Google has said it will appeal against the decision.

Lee-Anne Mulholland, Vice President of Regulatory Affairs, said, “We won half of this case and we will appeal the other half.”

“The Court found that our advertiser tools and our acquisitions, such as DoubleClick, don’t harm competition,” Mullholland said. “We disagree with the Court’s decision regarding our publisher tools. Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.”

After the lawsuit was filed in 2023, the tech giant had described the Justice Department’s argument as “flawed” and would “slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.”

During the trial, Google’s lawyers argued the case focused on its past activities, adding that prosecutors ignored competition from other large ad tech providers, including Amazon and Comcast.

What does the ruling mean?

The latest verdict is the second setback for Google after a judge in a separate case ruled last August that it maintained an illegal monopoly in online search – the bread and butter of the company.

The decision has paved the way for the judge in Virginia to hear arguments about what Google should do to reinstate competition in those markets. It could lead to the company being forced to divest part of its online ad business.

The Justice Department has suggested that Google sell off at least its Google Ad Manager, which entails the tech giant’s publisher ad server and ad exchange.

However, experts point out that the US government’s failure to win all of its claims against Google could make the divestment less likely. Speaking to CNN, William Kovacic, global competition professor of law and policy at The George Washington University Law School, said, “The general idea in other antitrust cases is that the remedy has to be proportional. The broader the finding of illegality, the deeper the finding of deliberateness… the greater the platform for a bolder remedy.”

As per Reuters, Google is open to divesting some of its ad tech business, if it comes to that. It previously explored selling off its ad exchange to appease European antitrust regulators.

Laura Phillips-Sawyer, a professor at the University of Georgia School of Law, told BBC that the ruling was a significant victory for US antitrust enforcers. “It signals that not only are agencies willing to prosecute but also that judges are willing to enforce the law against big tech firms,” she said.

According to Phillips-Sawyer, the judgement has set a legal precedent and could affect decision-making in corporate America.

The verdict has been welcomed by some tech critics and media organisations.

“For years, Google wielded unchecked monopoly power over the digital advertising market – using it to suffocate the media industry and force middleman taxes on everything we buy online,” Sacha Haworth, executive director of the Tech Oversight Project, was quoted as saying by CNN.

But will this verdict affect Google users? No.

According to Anupam Chander, professor of law and technology at Georgetown University, internet users will not see a difference online due to the ruling. However, it impacts “the division of monies between advertisers, publishers, and ad service providers”.

“The judge seems willing to order structural changes in Google’s ad exchange practices, which may affect Google’s bottom line somewhat, but don’t seem to necessarily threaten its core value proposition as an advertising middleman,” he told BBC.

Google has bigger challenges on its hands. Next week, a judge in Washington will hold a trial to decide on the US government’s suggestion that Google sell its Chrome browser and take other steps to end its unlawful monopoly in online search.

The tech giant plans to appeal the ruling.

With inputs from agencies