DOJ and 8 states sue Google over digital ad dominance

The Department of Justice and eight states have filed a lawsuit against search engine Alphabet Google for allegedly monopolizing the digital advertising market.

“Google is abusing its monopoly power to disadvantage website publishers and advertisers who dare to use competing ad technology products in search of higher quality or lower price matches,” according to a 149-page Justice Department lawsuit filed in federal court in Virginia.

New York, California, Virginia and Colorado were among the states that signed the lawsuit aimed at destroying Google’s massive advertising business.

“We allege that Google has used anti-competitive, exclusionary, and illegal practices to eliminate or seriously reduce any threat to its dominance of digital advertising technology,” Attorney General Merrick Garland said in a statement.

Google’s advertising business generates about 80% of its revenue. Google expects to generate $73.8 billion in digital advertising revenue this year alone.

In addition to its well-known free search, Google generates revenue from its interconnected advertising technologies, which connect advertisers to newspapers, websites and other businesses that wish to host them.

Google responded to the lawsuit by saying the government is “doubling down on a flawed argument that will slow innovation, raise ad fees, and make it difficult for thousands of small businesses and publishers to grow.”

Alphabet shares closed down 2% at $99.21.

The suit is the first time the Biden administration has challenged the tech giant.

The Justice Department under then-President Donald Trump filed a lawsuit against Google for allegedly using exclusivity agreements with wireless carriers and phone makers to exclude competitors from its search engine. The case is due to go to trial in September.

Google’s competitors have long accused the search giant of a lack of transparency in the distribution of advertising dollars.

The tech giant said the digital advertising market has been competitive, citing competitors like Facebook, AT&T, Comcast and others.

While Google remains the market leader, its share of U.S. digital ad revenue is declining, from 36.7% in 2016 to 28.8% last year, according to Insider Intelligence.

The company has also been sued three times by three state attorneys general.

Last year, Texas, Indiana, Washington State and the District of Columbia sued Google for what they allege was a deceptive location tracking practice that invades users’ privacy.

Dozens of other states signed the lawsuit. In the end, Google agreed to settle with 40 states for $391.5 million.

With mail wires