Google Sued For Advertising Market Antitrust Violations

Google was sued by advertisers for allegedly creating “an illegal monopoly by eliminating competition in digital display advertising” in a class action filed in the Northern District of California on Monday. Google was accused of antitrust violations, specifically for violating the Sherman Act and California’s Unfair Competition Law.

Google’s parent Alphabet attributed 82 percent of its revenue, or $133 billion, from its advertising business, especially search and display advertising. Google is responsible for 37.2 percent of the digital advertising marketplace. In search advertising, an ad appears on a search engine result page for a related inquiry; an advertiser pays when a consumer clicks on the ad. Display ads, on the other hand, are for “publishers” who use tools to find advertisers and sell advertisers space on their site; these ads are placed on websites the target audience is likely to visit.

Google allegedly “gained dominance in the display advertising ad tech stack through acquisition of competitors, exclusivity provisions, interoperability/compatibility design choices, and development of its analytics services. With its ability to track millions of users across millions of sites and apps, other publishers cannot compete with Google’s informational advantage.” This market power has “allowed [Google] to charge supra-competitive prices to advertisers.”

The plaintiffs noted that “it is nearly impossible to advertise online except through Google’s advertising services.” As a result, advertisers are allegedly faced with “higher advertising prices, higher consumer prices, decreased revenue for online newspapers and other web publishers, and overall reduced competition in the buying and selling of digital advertising.” The plaintiffs asserted that consumers ultimately pay for this through higher prices for goods.

Plaintiffs Michael Devaney, Nicholas Arrieta and Sara Ybarra state that “[u]ntil fairly recently, different firms provided various services in the ad tech stack, and intermediaries did not own the publisher or advertise. This is no longer the case – After a series of acquisitions, Google now dominates and controls the ad tech stack. Since 2007, Google has made at least nine key acquisitions in the interest of gaining control of the entire ad tech stack.” Specifically, “Google purchased a publisher ad server in 2007 called DoubleClick, for example; the technology from that company served as the basis for Google’s current publisher ad server. It acquired AdMob in 2009; AdMob owned technology for serving ads on apps. It purchased Invite Media in 2010, which Google developed into its main demand side platform. In 2011, it purchased AdMeld, a supply side platform that it integrated into AdX, the Google exchange. And in 2014, Google bought Adometry, an analytics and attribution provider it then integrated into Google Analytics. Together, these acquisitions reveal a sustained effort to occupy the entire ad tech stack as well as the related analytics market through mergers.”

As a result of these transactions, Google allegedly “now hold at least 90% of the PAS market through multiple products such as Google Ad Manager and Google Double Click for Publishers.” Google supposedly owns a large market share for the other aspects of the advertising process. The plaintiffs claim that this has enabled Google to “broker transactions on both sides and steer advertisers to its own digital display platforms.”

The plaintiffs, who placed online advertisements through Google, claim that they overpaid and suffered financial loss from Google’s market power. Unlike traditional advertising, which was placed and counted in print, digital advertising “is automated and data-driven.”  Google allegedly uses the vast amount of information it has about consumers to better target consumers than other providers are able to target. Further, the plaintiffs stated that Google has made it hard for competitors to obtain similar information by phasing out third-party cookies.  Ad pricing is determined by “the ability to identify who is loading the page, and the ability to then connect the user’s identity with more information about the user.” Google tracks users on more than 70 percent of the top one million sites and tracks users across these sites.

Google is currently being investigated by the DOJ over its potential monopolistic conduct and 50 Attorneys General are probing Google for potential antitrust violations.

Google is accused of violating the Sherman Act because it “wrongfully acquired and unlawfully maintained monopoly power in the relevant markets” through its alleged conduct, which the plaintiffs claim has hindered competition, hurt consumers, and forced advertisers to use Google for their advertisements, as well as pay a higher price for these ads. Google allegedly violated the California Unfair Competition Law because its “unfair business practices…ha[ve] restrained competition.”

The plaintiffs have sought to certify the class injunctive relief; an award for compensatory, actual, exemplary, and statutory damages, including treble damages; an award for costs and fees; pre-  and post-judgment interest; leave to amend the complaint to adjust for evidence produced at trial; and other relief as determined by the court.

The plaintiffs are represented by Ahdoot & Wolfson, PC.