A judge is considering whether the biggest revenue driver for one of the world’s biggest tech companies is playing fair.
What happened: Google’s latest antitrust trial got underway in the U.S. this week, this one looking at its dominance in adtech. The Department of Justice claims that Google developed a monopoly in online advertising through a series of acquisitions and maintained it with business practices that favour its own services.
- Google has said its products offer customers convenience in the complicated adtech realm. Its defence is that the DOJ is forcing it to deal with rivals and its case misdefines the digital ad market.
How it works: Automated online ad buying has three main pieces of tech: demand-side platforms that advertisers use to buy ads; supply-side platforms that publishers use to manage their inventory; and exchanges that handle transactions between the two.
- Google has the most popular services in all three areas, which the DOJ claims let it manipulate ad pricing and put unfair conditions on accessing its tools, which are often tied together.
What they’re saying: A former News Corp executive testified that it felt like she was held hostage by Google, and was dismissed as “emotional” and “unproductive” when she complained. News Corp explored switching to a competitor, but being locked out from Google’s platforms would cost it US$9 million in revenue.
Why it matters: Advertising is the backbone of Alphabet’s business, accounting for 78% of the US$307.4 billion in revenue it made last year. The outcome of the trial may change that, as well as impact advertisers and publishers that have been testifying that they feel locked in to Google’s terms and prices.
- Google’s control in adtech led to laws like the Online News Act — its market share lets it take a huge portion of the revenue news outlets generate from ads, and the Act was an effort to recoup some of that money.
Big picture: Breaking up a company is a tricky process that authorities rarely pull the trigger on successfully. But since the complaint alleges that acquisitions gave Google its dominant position, forcing it to offload part of its ad business could be a logical move for regulators that are getting bolder about competition.