The Justice Department filed an antitrust lawsuit against Google on Tuesday that accuses the internet search giant of unlawfully bullying competitors that challenge its dominance in the digital advertising marketplace.
The lawsuit, which has the potential to break up Google’s massive advertising business, was joined by eight states including California, New York, Colorado and Virginia.
“One industry behemoth, Google, has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers and brokers, to facilitate digital advertising,” the lawsuit says. “Having inserted itself into all aspects of the digital advertising marketplace, Google has used anticompetitive, exclusionary and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies.”
The Justice Department said Google’s anticompetitive conduct included acquiring competitors, forcing website publishers to use Google tools, and distorting and manipulating advertising auctions. The department accused Google of controlling nearly all tools used by web publishers to sell ads and controlling advertiser tools used to buy advertising inventory.
Google said the lawsuit is an attempt by the Justice Department to “pick winners and losers in the highly competitive advertising technology sector.”
“DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow,” the company said in a statement.
The Justice Department rejected Google’s response and said its lawsuit was not a rehash of old arguments or similar lawsuits filed by other states.
“We don’t pick winners or losers, we pick those who violate the antitrust laws,” Attorney General Merrick Garland said. “Those are the people we sued. In this case, we sued Google because we believe it violated the antitrust laws.”
Google’s supporters said the lawsuit is unnecessary in an economic environment in which major tech platforms are shedding thousands of workers. Google CEO Sundar Pichai emailed employees on Friday to tell them the company was cutting 12,000 jobs.
The liberal Chamber of Progress, which partners with Google, said the Justice Department’s case is unwarranted.
CEO Adam Kovacevich called the case “pretty disconnected from economic reality.”
“As the tech sector and advertising industry shed jobs, the Biden administration should be looking for ways to support these sectors rather than undermine what’s left,” Mr. Kovacevich said in a statement.
Advertising revenue is critical to Google’s business. Google reported ad revenue totaling nearly $54.5 billion in the third quarter of 2022, up more than $1 billion over the same quarter in the previous year.
The ad revenue represented nearly 80% of Google’s total revenue for the third quarter. The company is scheduled to report its fourth-quarter financial performance next week.
The Justice Department said Google’s conduct has all but eliminated competition for digital advertising business.
“Google’s exclusionary, anticompetitive acts have severely weakened, if not destroyed, competition in the ad tech industry,” the lawsuit states. “In decision after decision, year after year, Google has repeatedly done what was necessary to vanquish competitive threats, including by enacting policies that took choices away from its own customers.”
The department said Google might claim to protect the privacy interests of people online but instead exploits data to “entrench its monopoly across the digital advertising industry.”
This is not the first time the federal government has tackled Google. Under President Trump, the Justice Department took aim at Google and filed an antitrust lawsuit in October 2020 alongside 11 states. The department said Google was “unlawfully maintaining monopolies through anticompetitive and exclusionary practices in the search and advertising markets.”
That case is continuing. Some conservative supporters of the Trump-era action, including conservative Internet Accountability Project founder Mike Davis, cheered President Biden’s team.
Mr. Davis said the Justice Department’s lawsuit represented a step in the right direction and that Congress should follow up with an overhaul of antitrust law. He praised the Biden administration’s antitrust division chief at the Justice Department.
“There’s not much the Biden administration is doing right, but enforcement of federal antitrust laws is one area on which we agree,” Mr. Davis said in a statement. “Big Tech monopolists like Google have far too much control over the digital ad market because they engage in unfair, anticompetitive and illegal practices.”
The new lawsuit was filed in the U.S. District Court for the Eastern District of Virginia. Other states joining the legal action are Connecticut, New Jersey, Rhode Island and Tennessee.