States join DOJ in lawsuit against Google alleging ad monopoly

Eight states joined the federal Department of Justice on Tuesday in a lawsuit against the search giant Google alleging the company exerts monopolistic control over digital advertising on the internet.

The 155-page complaint filed in federal court in Virginia accuses Google of exerting a “stranglehold” over technological tools, known as ad tech, that almost instantly match ads to users.

“One industry behemoth, Google, has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising,” the lawsuit reads.

Attorneys general in California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia joined the suit.

“Google’s anticompetitive practices and obsessive need for control of ad tech markets has not only controlled pricing, but has stifled creativity in a space where innovation is crucial,” California Attorney General Rob Bonta (D) said in a statement. 

New York Attorney General Letitia James (D) said Google’s monopoly has resulted in website publishers getting less ad revenue.

“I am proud to partner with the Department of Justice and fellow attorneys general in pushing back against Google’s illegal actions,” James said in a statement. “I will not allow companies, no matter how large or powerful, to take advantage of New York consumers or small businesses.”

The lawsuit seeks a finding that Google has repeatedly violated the federal Sherman Antitrust Act and aims to force the company to divest itself of Google Ad Manager suite.

This is not the first time the federal government and states have teamed to sue Google, whose parent company is Alphabet Inc.

In 2020, 11 states and the DOJ filed an antitrust lawsuit against the company over its dominance of the online search marketplace. That same year Texas Attorney General Ken Paxton (R) and nine other state attorneys general sued Google alleging “anticompetitive and deceptive practices” related to online-display ads. That lawsuit has since been largely dismissed.

Last year, a coalition of 37 state attorneys general led by Utah Attorney General Sean Reyes (R) filed a lawsuit against Google accusing it of operating its app store, Google Play Store, as a monopoly.

In a statement Tuesday, Google rejected the allegation that it operates a monopoly.

“Today’s lawsuit from the DOJ attempts to pick winners and losers in the highly competitive advertising technology sector,” the statement read. “It largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was recently dismissed by a federal court. DOJ is 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.”

In a later blog post, Google’s vice president of global ads, Dan Taylor, wrote that Google is one of hundreds of companies that place ads on the internet and asserted that competition is growing, not shrinking, in the online advertising space.

“With this increased competition, it’s no wonder fees across the industry are reportedly flat or falling for digital display advertising technology,” Taylor wrote.

Chamber of Progress, a center-left tech group whose corporate partners include Google, also assailed the lawsuit and questioned its timing.

“Google’s online ad market share is now at an all time low, and it just laid off 12,000 employees in the midst of a declining advertising market – so this DOJ case seems pretty disconnected from economic reality,” Chamber of Progress CEO Adam Kovacevich said in a statement.

The DOJ and the states counter in their lawsuit that “Google has thwarted meaningful competition and deterred innovation in the digital advertising industry.”

Google reported third quarter ad sales of $54.5 billion, reflecting slowing growth in the online advertising marketplace.