• The DOJ has filed a lawsuit against Google, alleging that the company has abused its role as one of the largest brokers, suppliers, and online auctioneers of ads placed on websites and mobile applications.
• The lawsuit seeks to unwind Google’s “anticompetitive acquisitions” and calls for the divestiture of its ad exchange.
• Google has used its market power to force more publishers and advertisers to use its products while disrupting their ability to use competing products effectively.
• Google’s power in digital advertising stems from a series of acquisitions, beginning with the company’s $3.1 billion purchase of DoubleClick in 2008.
• Google has capitalized on its well-known search engine to start a profitable search advertising business, Google Ads (formerly AdWords).
• Google Ads’ unique and sizeable advertiser demand is what makes Google’s ad exchange unavoidable for most website publishers.
• A 2014 Google experiment found that more than half of the impressions that publishers offered on its ad exchange would go unsold without the critical Google Ads’ demand.
• Google has effectively locked out meaningful competition in the digital advertising industry by leveraging its control of the “operating system” of advertising.
• Google has Aggregated the long tail of advertisers, and that long tail is so large that no publisher can do without them.
• Google has then levered access to those advertisers into control of the “operating system” of advertising, and with that control systemically favored itself.
• Google shifted money from advertisers to publishers by submitting two bids for ad slots from Google Ads, which systematically increased the winning price for an ad.
• Google’s defense is the “no duty to deal” argument, which is based on the Supreme Court case Verizon v. Trinko.
• The most likely outcome is that this case highlights exactly where current law is deficient in limiting big tech companies.
Published January 25, 2023
Visit Stratechery to read Ben Thompson’s original post DOJ Sues Google, Google’s Advertising Aggregation, No Duty to Deal
