By The Editorial Board
Google has been smacked with so many antitrust lawsuits over the past few years that it’s easy to see the latest as more of the same. Yet the Justice Department’s case, announced last month, deserves close attention — not because it tests out some groundbreaking theory of competition, but because it doesn’t.
When most Americans think of Google, they think of a search-engine behemoth, and of course, they’re right. Yet unlike another DOJ case brought under the previous administration, the latest lawsuit doesn’t focus on the power the company holds over what we look for on the internet. Instead, it focuses on what we don’t go looking for and see anyway: advertisements. The argument is relatively straightforward: Google dominates this market by playing a key role in the technology at every point along the “ad stack.” In a nutshell, this is how it works:
How online ads are sold: Websites use what’s known as a publisher ad server to determine how their ads are sold.
Google’s many roles: Google owns a tool commonly known as DoubleClick for Publishers*, which the DOJ estimates holds about 90 percent of the publisher ad server market.
Websites and advertisers buy and sell space in digital ad exchanges.
Google owns Google Ad Exchange*, or AdX, a tool where deals between websites and advertisers actually get made. AdX has about 50 percent of the market share, according to the DOJ.
Advertisers use tools that allow them to identify the audiences they target.
Google owns an industry-leading tool for buying advertising space across the web called DV360.
It also owns Google Ads, a tool for buying ads on Google’s own sites, such as search and YouTube, as well as on third-party sites.
So what’s the problem? The Justice Department says Google has monopolized the advertising market as a whole, exploiting control over every point in the ad stack to exert its hold on every other aspect and to extract inflated fees from website publishers and advertisers along the way. What’s interesting about this argument is in part how uninteresting it is compared with others that the government has made recently: no attempts to claim that competition for competition’s sake, rather than merely consumer welfare, demands protection; no stab at preventing consolidation in a market that doesn’t even exist yet.
This is good, old-fashioned antitrust enforcement. The contention is that by owning all these tools and then abusing that concentration, Google has caused prices to increase — and those hikes, eventually, are passed on to consumers. Granted, proving that prices did rise above what they would have been absent Google’s allegedly anticompetitive behavior isn’t easy. But if the DOJ can manage to do so (a similar case filed in 2020 by state attorneys general in 16 states plus Puerto Rico is pending in New York), the judge won’t be able to shrug and ask, “So what?”
Still, challenges loom. Google’s market share of digital ad spending is 26.5 percent, plus 2.9 percent from YouTube. That’s down from 37.4 percent at its peak. Rivals including Amazon, TikTok, Hulu and Roku are on the rise. Google points out that advertisers and publishers are increasingly mixing and matching the technologies they buy and sell on, rather than opting for one company’s offerings alone. The company also disputes many of the charges about its conduct contained in the complaint. And there’s another snag: Some of these charges would be manifestly illegal if proved — such as imposing contractual constraints that prevent trading partners from dealing with rivals. Others, however, wouldn’t.
