A high-stakes trial began this week in a federal court in Virginia to decide whether Google holds a monopoly in the online advertising industry. The lawsuit, filed in January 2023 by the U.S. Justice Department and attorneys general from eight states (Virginia, California, Colorado, Connecticut, New Jersey, New York, Rhode Island, and Tennessee), claims that Google wields too much control over digital advertising. The lawsuit argues that Google owns the tools used for buying, selling, and displaying ads and has manipulated market prices while forcing ad buyers to use its services.
In her opening statement on Monday, Justice Department lawyer Julia Tarver Wood described Google’s control over the digital advertising market as a “trifecta of monopolies.” She explained that Google controls the ad server business for publishers, the AdX advertising exchange, and the advertiser network, which ultimately gives it dominance. “The rules are set such that all roads lead back to Google,” Wood stated.
Google counters that its success is due to its services, which isn’t illegal. The company also points out that other major players like Meta, Amazon, and Microsoft offer similar digital ad tech suites. Google attorney Karen Dunn, during her opening statement, argued that Google’s investments and research have pushed forward the entire online advertising sector. “We are a big company among many others, intensely competing,” Dunn said.
The trial follows other major decisions against Google’s dominance. Last month, a federal judge ruled that Google had violated antitrust laws to maintain its monopoly over search engines, although penalties for the company’s actions have yet to be determined. Additionally, in December, Google agreed to pay $700 million and adjust its mobile app store policies to allow users to make purchases using non-Google billing systems.
A ruling against Google’s ad business could significantly reshape the company’s revenue. Analysis firm eMarketer predicts that Google will generate $77.49 billion from digital advertising this year, which makes up roughly a quarter of the entire market. While Google’s parent company, Alphabet, has diversified revenue streams, the vast majority of its income still comes from advertising. Given last month’s ruling against Google’s search engine practices, the future of the digital search and advertising landscape could see major changes in the coming years.
Meanwhile, digital video advertising has seen rapid growth, with the Interactive Advertising Bureau (IAB) reporting a 16% year-over-year increase in spending this year. I spoke with Peter Day, CTO of the digital advertising company Quantcast, about the reasons behind the surge in digital video advertising and what the future holds.
