When Americans think of Google, most think of products we use every day, such as a search engine so ubiquitous that “Google” is a verb in the dictionary. They know Google Maps and Gmail and the Chrome browser. Some may also think of YouTube, which was bought by Google in 2006 But Google is mostly just a giant advertising company The tech giant gets 80 percent of its revenue not through well-known products but by selling digital ad space and acting as an intermediary between marketers trying to reach audiences online.
On Tuesday, the Department of Justice’s (DOJ) Antitrust Division attacked this key part of Google’s business model, alleging in an antitrust lawsuit filed in Virginia that the tech giant is abusing it by stealing resources from news organizations and other publishers as well as advertisers. Market power in digital advertising. To break its near-monopoly, the DOJ, along with eight states, including New York and California, wants Google to offload its so-called “ad technology platforms,” the digital exchanges it controls to buy and sell ads on the Internet.
The theory of the case echoes a theme this magazine has long championed that we want to note at this historic moment. As Philip Longman wrote in “Starving the News” in 2020, Google’s cornering of the digital advertising market has eroded the financial base of an independent press in America, destroyed thousands of journalistic jobs, and caused the near death of local journalism. Not because of Google’s technological genius, but because the federal government, during successive Republican and Democratic administrations, has failed to enforce antitrust laws and regulations routinely used to stimulate strong competition in the Washington communications network and media markets. Broadcast networks were limited in the number of stations they could own and operate, just as movie studios were not allowed to own theater chains. Arguments in Longman’s part are echoed throughout the DOJ’s brief.
To get it right, Longman argued, the government simply needs to reapply those traditional principles, which the DOJ is doing in a big way with this case. If successful, the implications could be far greater for print and broadcast media, returning to their dried-up coffers a revenue stream that has been diverted to Google.
Google’s dominance in the advertising business targets the primary revenue stream of most news outlets: advertising. As Longman points out in his writings, advertising made publications as diverse as abolitionists possible constants, Founded by Frederick Douglass, and The Rolling Stones, cbs news, And your local alt-weekly. Publications will sell advertising, and companies will find buyers for their products and services.
As the Internet expanded at the turn of the century and advertisers counted on third parties to place their ads where the most profitable readers or viewers were, the press continued to do well, as did a burgeoning blogosphere. Journalist entrepreneurs can take advantage of low barriers to entry and make a decent living from digital advertisers.
That changed. In 2007, Google bought DoubleClick, a large third-party company, for over $3 billion. Longman notes that although Google promised not to use vast troves of user data through Gmail, search, maps, etc. to power its advertising business, it has reneged on that agreement. Now Google has a distinct advantage over other ad managers, with greater leverage over publications as well as anyone willing to place an ad.
It got worse after 2007 as Google bought more ad-tech-related companies. Today, Google owns the ad exchange AdX, a platform that serves publishers called Google Ad Manager, a platform for large advertisers called DV360, and another for smaller advertisers called Google Ads.
The lawsuit argues that by inserting itself into all aspects of what marketers call the “supply chain” of digital advertising, Google gained a dominant position that helped it lock publishers into using its ad technology tools. By operating ad technology designed for both publishers and advertisers, Google has acted as a “black box,” where advertisers have little visibility into where their money goes and where ads appear. Pretty soon, it got to the point where if you wanted to sell your publication ads, all the market had an incentive to do was go to Google.
According to the Justice Department, the Mountain View, Calif.-based giant charged hefty fees and stole revenue from media outlets. The suit asks the court to stop Google’s “competitive acquisitions,” including its purchase of DoubleClick. It also called for the disintermediation of its ad exchange.
“For 15 years, Google has pursued a course of anticompetitive behavior that has allowed it to block the rise of rival technologies, exploit auction mechanics, distance itself from competition and force advertisers and publishers to use its tools,” Attorney General Merrick Garland said. Tuesday said. “Google has engaged in exclusionary conduct that has seriously weakened, if not destroyed, competition in the ad-tech industry.”
Last year, to stave off such a suit, Google offered to spin off parts of its ad-tech business into a separate company under the tent of its parent company, Alphabet. The Justice Department denied the motion.
Not surprisingly, Google is vowing to fight the lawsuit just as it has fought lawsuits targeting its dominance of the search market and antitrust efforts by European regulators. The legal process can take years, and the outcome is uncertain. But the case is important because it could reverse years of print and broadcast decline and signal that Washington is getting serious about the antitrust business. It is also a matter of great pride Washington Monthlywhich is committed to fighting monopolies, and whose writers, especially Longman, have done much to provide the intellectual legwork that made this moment possible.
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