Inside Google's antitrust lawsuit: Global scrutiny & future of big tech

Imagine that you want to buy clothes and there’s only one store available to shop from. Over time, the store grows its business and buys out all the local competitors, eventually increasing prices, limiting choices and reducing innovation and discounts owing to lack of competition. As a customer, you have no choice but to shop from the store, while it keeps benefitting.

Such is the scenario we see today in the digital world where businesses and consumers face fewer choices in the search engine and digital advertising markets, the area where tech giant Google is accused of reigning. The statistics speak for itself. In Q1 2024, Google’s advertising revenue on search and other advertising products was at $46 billion with a CAGR of 13% over a three-year period. 

When a company holds vast control over an essential part of the internet, competitors struggle to break through, and users are left with fewer alternatives, whether they realise it or not. This is the essence of what the U.S. Department of Justice (DOJ) and various global governments allege Google has done by maintaining a monopoly in search and digital ads.

When did it begin?

The Google antitrust lawsuit - as it has come to be known - first began in 2019 when regulators and lawmakers in the U.S. started scrutinising big tech companies rigorously. The formal antitrust lawsuit was filed in October 2020 by the DOJ, accusing the company of maintaining a monopoly in search through ‘exclusionary agreements’ and contracts that prioritised Google’s services.

The court’s argument was that Google has abused its dominant position by making deals to ensure its search engine remains the default on web browsers and mobile devices. This behaviour has been claimed to have stifled competition and created barriers to entry for smaller players. 

There have been two lawsuits in 2020 and 2023 that focused on the company’s alleged dominance in the internet search market. Guess what, Google allegedly holds 90+% market share in search, significantly higher than its competitors. The company’s internal data presented during the trial revealed that it paid $26.3 billion for its search engine to be the default selection on mobile and desktop browsers in 2021.

In August 2024, the company lost its case as it was found to have violated US antitrust law by maintaining a monopoly in the search and advertising markets. Additionally, U.S. District Judge Amit Mehta ruled that Google is a ‘monopolist’, stating that it violated section 2 of the Sherman Act, a US antitrust law.

The complaint statement even mentioned, “Google is so dominant that ‘Google’ is not only a noun to identify the company and the Google search engine but also a verb that means to search the internet.”

While Google’s journey to dominance began with its search engine, the real power came from advertising. It built an empire around search ads and later expanded to display ads, video ads on YouTube, and programmatic advertising via acquisitions. The company’s significant purchase was DoubleClick in 2008, which gave Google access to a dominant ad-serving platform. This acquisition allowed it to control both the buying (advertisers) and selling (publishers) sides of the digital ad market.

The ad tech antitrust case: Why is it concerning?

With regards to the accusations of monopoly, Google tried to defend itself by arguing that its success is not a result of any illegal practices but due to consumers preferring its services. According to the company, people use its search engine because it is the best product available, not because they are forced to. Furthermore, it argued that agreements made with companies like Apple to be the default search engine on Safari are fair business deals, not monopolistic behaviour.

The ongoing lawsuit that began on September 9 focuses on Google defending itself against claims that its advertising business has acted as a monopoly that’s led to higher ad prices for customers.

The Virginia bench trial focuses on Google’s Ad Manager, which enables publishers and advertisers to manage, buy and sell advertising on sites. The DOJ wants Google to sell off its Ad Manager service as per Wedbush analysts who reviewed court documents, reports suggest.

It has to be noted that the lawsuit doesn’t target other Google Ad tech services such as Google Ads. The service is for businesses looking to advertise their products or services on search, websites, YouTube and other partner sites.

The lawsuit focuses on two aspects: Whether the company has a monopoly in the ad tech industry and whether it achieved this through anti-competition. The DOJ estimates that Google’s share in the ad tech market ranges between 40% to 90% as of 2022. If proven to have a 90% share, it might as well be a loss for the company. 

The accusation against Google is that it controls a huge portion of the online advertising market. Specifically:

• 91% of the market is for ad servers, which are platforms that allow websites (publishers) to offer space for ads.

• More than 85% of the market is for ad networks, which are used by advertisers to place their ads on websites.

• Over 50% of the market is for ad exchanges, which are platforms where ads are bought and sold between advertisers and publishers.

Google has disagreed by saying that focusing on website ads can’t be considered a key market and that ads on social media and mobile devices are now more relevant to ad technology. Another aspect of this trial is understanding if the company rigged auctions by blocking access to important data, making it more expensive for businesses to switch to other services.

Google has allegedly promoted its own process, Open Bidding against Header Bidding (which allows publishers to sell ad space to multiple markets). Additionally, Google allegedly kept its pricing unclear, allowing it to charge higher fees (around 20%) compared to its rivals without a clear reason, while giving its own products an unfair advantage.

In the trial, internal Google documents revealed that the company knew publishers would resist changes brought on by the company in 2019 that reduced their reliance on Google’s ad tools. To make these changes more acceptable, Google introduced other features at the same time to make the system seem fairer. Despite some backlash, Google claimed the changes helped publishers increase their ad revenue by 2.7% on average.

Interestingly, introducing new features to distract buyers and sellers seems to be a pattern. The company has been introducing new features and tools for advertisers with the ongoing case.

Damages Google could face

If Google is found guilty of all the accusations, it might have to divest one of Google’s ad tech businesses (Google Ad Manager) which could be significant since the company is said to generate approximately $200 billion in revenue from digital advertising. However, reports suggest that the business unit represented 4.1% of overall revenue and 1.5% of Alphabet’s operating profit in 2020 and accounts for less than 1% of operating income this year. 

Penalties could also include divesting Google’s Chrome browser or Android smartphone operating system. This would force the giant to share its data with rivals or cancelling contracts making its search engine the default option on devices like the iPhone, according to a report. 

Additionally, it may face lawsuits from advertisers seeking financial compensation. These lawsuits could total up to $100 billion, according to analysts from Bernstein, as reported by CNBC. 

In the ongoing trial, the DOJ has accused Google of intentionally obscuring potentially damaging communications by labelling emails as ‘privileged and confidential’ and using chat messages with history turned off, despite being under a legal obligation to preserve evidence. Former Google executives testified that it was common practice to communicate ‘off the record’ in chats to avoid creating documented trails of sensitive conversations, even after a litigation hold was in place. The DOJ presented evidence of these practices in court and if the judge concludes that evidence was deliberately destroyed, Google could face severe consequences. 

Worldwide scrutiny

Google’s lawsuit troubles go beyond its fight with the US authorities. Recently, the UK’s Competition and Markets Authority (CMA) provisionally concluded that the giant is engaging in anti-competitive practices in the open-display advertising technology market. According to the CMA, these practices were harming thousands of UK publishers and advertisers.

The authority’s 2019 study into digital advertising revealed that advertisers were spending around £1.8 billion annually on open-display ads, promoting goods and services through apps and websites to UK consumers.

With this, the European Commission fined Google €1.49 billion ($1.66 billion), accusing the company of abusing its market dominance through its AdSense platform. The claim suggested that Google was preventing websites from using ad brokers other than AdSense from 2006 to 2016, limiting competition. 

However, Google appealed the decision, and the Luxembourg-based General Court recently annulled the fine. While the court agreed with most of the Commission's findings, it ruled that the fine was unjustified because the Commission did not fully consider the duration of some of Google's contracts. The court noted that the company had amended these contracts in 2016 before the fine was imposed.

Although Google won this appeal, it lost another challenge to a separate €2.42 billion fine for its price comparison shopping service. 

In India, the Competition Commission of India (CCI) fined Google approximately $160 million (Rs. 1337.76 crore) in 2022 for abusing its dominant position in the Android ecosystem to favour its services over competitors. While these fines may seem substantial, they are relatively minor compared to Google’s revenue. 

If the government wins in the US vs Google antitrust trial, we could witness a decision similar to the outcome of Microsoft’s antitrust lawsuit in the late 1990s. Back then, Microsoft was accused of leveraging its Windows operating system to stifle competition in the web browser market. The lawsuit led to a series of solutions that curtailed Microsoft’s power, opening the door for competitors like Google itself to rise.

In Google’s case, the government victory could result in restructuring and regulation and competitors like Microsoft Bing or even niche search engines could gain a more significant foothold, thus diversifying the market.

The allegations Google has been accused of might as well justify Judge Amit Mehta’s ruling of the company being monopolistic. However, the tech world is largely a network of interconnected monopolies. While Meta dominates social media, Amazon controls e-commerce, and Apple rules over mobile devices and app distribution. These tech giants operate in ecosystems where they make secret agreements to reinforce each other’s dominance, making it difficult for new players to break in.

A win against Google may set the stage for taking on other Big Tech firms, potentially sparking more lawsuits that challenge the dominance of these companies. But curbing Google’s power doesn’t guarantee a more competitive market, it might just shift the balance of power from one tech giant to another.

Decode is a weekly series where we will be decoding what’s happening in the world of social media and technology.