Internet giant Google was slapped with a loss in federal court Thursday when a judge ruled the company unfairly dominated digital marketing.
The ruling gives federal prosecutors the authorization they would need to break up the company’s advertising products.
The lawsuit filed by the Justice Department and 17 states accuses Google of antitrust violations through its digital ad marketing strategies.
It says Google “rigged the rules of auctions” for online ads by leaving web publishers, advertisers and general consumers few other options. The department says Google packaged its technology for placing digital ads with other services to force advertisers to use more of its products.
Competitors did not have the same degree of control over the online ad technology, the Justice Department argued.
Google reported annual revenue of $348 billion in 2024.
Roughly 80% of it came from advertising sales on its sites and affiliated network. Much of the rest comes from apps and other products it sells.
The states and federal government have proven that Google violated federal antitrust law “by willfully acquiring and maintaining monopoly power in the open-web display publisher ad server market and the open-web display ad exchange market,” says the judgement in U.S. District Court in Alexandria, Virginia.
Google’s display advertising division that was hit hardest by the court’s ruling generates $8 billion per quarter for the company.
The ruling appears to be a setback for Google and parent company Alphabet’s effort to expand into artificial intelligence as it competes in the emerging field with OpenAI and TikTok. Other competitors who could benefit are Apple, Amazon and Microsoft.
The case focuses on the way Google brokers the sale and placement of millions of ads on websites throughout the internet.
Like its competitors, Google uses technology that auctions ad spaces and matches ads with target markets based on the online data of users.
When a match is made, Google acts as the liaison to pass payment between advertisers and website owners. It collects a fee for the service.
Google is by far the biggest company that provides the ad matching service. It has acquired many of its competitors over the past 20 years.
“Google’s unparalleled scale in programmatic advertising has given it significant advantages over rival firms,” says the ruling from U.S. District Judge Leonie Brinkema.
Google argued that it used a marketing strategy that was designed to compete with hundreds of other companies that provide similar ad matching services.
Brinkema agreed with Google that it did not monopolize the market that served advertisers, only the publishers.
“We won half of this case and we will appeal the other half,” Lee-Anne Mulholland, Google’s vice president of regulatory affairs, wrote on X Thursday. “We disagree with the court’s decision regarding our publisher tools. Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.”
Brinkema ordered Google and the Justice Department to try to negotiate a way of resolving the antitrust violations. The court’s final ruling on how Google’s business will be affected is expected at a later unspecified date.
The ruling is only the latest setback for Google after it lost a different antitrust case in August 2024 over contracts for its search engine. Its previous contracts with Apple and other phone manufacturers required them to install Google as the default search engine on smartphones.
In 2023, a jury found that Google created an illegal monopoly in the way it operated its online app store. Among the allegations, Google was accused of arranging deals with some companies to keep them from building their own competing app stores.
Google faces other antitrust allegations in Europe.
Source: The Well News / Digpu NewsTex