The Justice Department and eight states filed suit against Alphabet’s search engine Google for allegedly monopolizing the digital advertising market.
“Google abuses its monopoly power to disadvantage website publishers and advertisers who dare to use competing ad tech products in a search for higher quality, or lower cost, matches,” the Justice Department said in its 149-page complaint filed in Virginia federal court.
New York, California, Virginia and Colorado were among the states that signed onto the lawsuit, which seeks to break up Google’s massive advertising business.
“We allege that Google has used anti-competitive, exclusionary and unlawful conduct to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” Attorney General Merrick Garland said.
Google’s advertising business is responsible for around 80% of its revenue. This year alone, Google anticipates generating $73.8 billion in digital ad revenue.
In addition to its well-known search, which is free, Google makes revenue through its interlocking ad tech businesses, which connect advertisers with newspapers, websites and other firms looking to host them.
Google responded to the lawsuit, saying the government was “doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.”
Alphabet shares closed down 2% to $99.21.
The suit is the first time that the Biden administration will take on a tech behemoth.
The Justice Department under then-President Donald Trump filed suit against Google for allegedly using exclusivity deals with wireless carriers and phone manufacturers to lock competitors out of its search engine. The case is scheduled to go to trial in September.
Google’s competitors have long accused the search giant of displaying a lack of transparency in how it divvies up its ad dollars.
The tech giant has claimed that the digital ad market was competitive, citing rivals such as Facebook, AT&T, Comcast and others.
While Google remains the market leader, its share of the US digital ad revenue has been eroding, falling from 36.7% in 2016 to 28.8% last year, according to Insider Intelligence.
The company has also been hauled into court on three separate occasions by three state attorneys general.
Last year, Texas, Indiana, Washington State, and the District of Columbia sued Google over what they alleged was deceptive location-tracking practices that invade users’ privacy.
Dozens of other states signed on to the lawsuit. Google eventually agreed to settle with 40 states by paying out $391.5 million.
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