Google acted illegally to maintain a monopoly in some online advertising technology, a federal judge ruled on Thursday, adding to legal troubles that could reshape the $1.86 trillion company and alter its power over the internet.
Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia said in a 115-page ruling that Google had broken the law to build its dominance over the largely invisible system of technology that places advertisements on pages across the web. The Justice Department and a group of states had sued Google, arguing that its monopoly in ad technology allowed the company to charge higher prices and take a bigger portion of each sale.
↫ David McCabe at The New York Times
Google has come under fire from all sides in the United States, being declared an abusive monopoly in two different court cases covering search and now online advertising. In this case, Google controls 87% of the online advertising market in the US, which clearly confers monopoly power onto the company. No actual remedies have been proposed yet in this case, though, but breaking up the company is on the table.
Google isn’t the only company facing antitrust court cases in the US, as Amazon and Apple, too, have the US government breathing down their necks. All three of these companies have overtly been trying to buy the favour of the new regime in Washington, but so far, without any success. I doubt we’ll get as far as a breakup, but I definitely think that’s the only real way we’ll ever get proper market forces at work again in the technology market.
Not that any of us are really “consumers” in this online ad business, but of course, monopoly pricing still affects us through higher prices for the goods being advertised. If companies are forced to accept Google’s higher pricing for online ads, those costs will definitely be offloaded to consumers. As such, even breaking up a monopoly that doesn’t seem to affect us personally can still improve our lives by lowering prices.
Yes, Google is probably a natural monopoly on advertisement. And, yes, there is actually some competition still.
But, I’m not sure this is something to be acted on.
Why?
Any outside meddling would hurt not only Google, but its customers, partners and a mature ecosystem.
Again, why?
Because this mostly happened naturally. People do come to Google for Search (and other products), and advertisers do want to advertise on those Search results. The prices are set by auction, and ranking is done to benefit both the users and the publishers (it is a delicate balance).
But, they are a monopoly.
Even if we agree on this, what would we do? Decouple Ads from Search? How? Will you bring Bing Ads on Google Search results? Make Search Ads free? Have an “independent party” authorize ads?
None of these would benefit customers nor the advertisers.
(I cannot read any of the linked articles as they are all behind a paywall, and I cancelled my NYT subscription).
Once again, being a monopoly is not illegal. What could be illegal is how you act on it.
(We might have other discussions on, for example, Google buying user information, or the explosion of Ads vs organic results on Search. But those are separate topics)
(Just to give context, I’m no longer affiliated with Google, and I have sold all my Google stock)
I agree with this sentiment. The question is, What should be done? As there is currently a huge rush/push for ChatGPT, Anthropic, Perplexity, Microsoft, etc. into Ai search, as they believe that Ai is the future of search as well as Google. My personal thoughts on Ai aside, should that be the next target for the US jusicial system and international judges also?
spiderdroid,
Yes, that is a valid point. AI is the first time the Google Ads is actually threatened (naturally, not by government).
The old model was organic. People used Search to find stuff. They had to explore not only the results page, which had Ads, the landing pages also had AdSense, (At least some of them. There were other networks of course). Basically every time you looked up information or a product Google could make money.
The new model?
You use AI agents to do the Search and also analysis for you. You don’t even see or interact with results, but get a final list of recommendations. All opportunities to serve Ads naturally are gone.
Worse?
AI results costs significantly more money to produce. So, instead of earning money per query, they would be losing now.
Is there a solution?
Maybe? Make the web into ad free, but subscription / “micro payment” supported architecture. That would harm a lot of small business that depends on Ads, but that might save the Web.
“Natural Monopoly” – oh boy. Maybe take some more advanced economics classes…
CaptainN,
Doesn’t this apply to Google? Especially for Search and Ads?
sukru,
For the most part advertisers are google’s “customers”. I disagree with the idea that google’s monopoly benefits advertisers. I’ve had so many clients who are customers of google because of their monopoly yet they almost unanimously despise google’s service. I’ve have countless examples of terrible google customer support. I suspect google provide better personalized service to their large customers, but as a small or medium business it’s bad. Perhaps not so bad if you don’t require support, but when you do then they easily deserve an ‘F’.
It’s always hard to break up a monopoly and google are no exception…but failure to do so leads to robber barons/oligarchy. This is not only unfair to competition, but I think we’re only beginning to understand how such high concentrations of power are skewing democracy itself with governments loosing interests in serving the people. There may be an element of “I don’t mind concentrations of power, as long as it’s my side”, but I think this is naive and we need to take the idiom of absolute power corrupting absolutely to heart. Obviously these problems are bigger than google alone, but even so google aren’t the “do no evil” company originally envisioned and google’s data collection practices are extremely dangerous to our privacy.
Alfman,
Yes, this is a bit sensitive area. But we should always look at the “alternatives”.
Before Google / AdWords and similar networks online ads practically nothing more than billboards, in usually “sketchy neighborhoods” (lots of porn or illegal activity).
Google (and others) brought personalization, hence more relevance to the ads. Especially on Search results. If I am searching for a “Dolby Atmos Sound Bar”, it is very likely I’m actually in the market for one. And unlike webpage ads, they are charged for click.
Yes, advertisers (customers?) feel compelled to pay for campaigns, since if they don’t, their competitors will.
But this is no different that Pepsi and Doritos paying for superbowl half time, and Coca Cola sitting out. It is a competitive market.
(I’m excluding actual coercive tactics from this, like the rumored Yelp keeping reviews hostage for ads, or removing negative feedback for big spenders. Since these are rumors I don’t know much about, let’s keep it at that)
Yes, it is, and we have paid for some of the mistakes (or collateral damage). The science output of entire US dropped for example after breaking up Bell Labs. Breaking local phone monopolies were meaningful, but they also damaged the research branch.
And this is probably relevant for Google and other tech companies as well. The amount of research papers in their respective fields is enormous. (Same for Nvidia, adobe in computer graphics, or akamai in web caching and optimization, etc)
And for “censorship”, yes there is a valid point. But most of it happened, or rather they were emboldened thanks to government intervention. Especially during COVID era they added a lot of tools against “misinformation”, which also had a lot of collateral damage.
Disliking Google’s behavior should not mean we should aim only to hurt them.
sukru,
The advertisers are chasing the eyeballs and google has those eyeballs. Because of this, google can afford to provide bad service and bad prices and still win.
The barriers to competition are very high. A competitor might build a better platform and offer better prices, but without the eyeballs it doesn’t really stand a chance. The same monopoly dynamics play out in terms of attracting more eyeballs. At the end of the day google’s customers put up with crappy support from google because they have the eyeballs.
We’ve got the same kinds of monopoly dynamics in other markets too. ISP monopolies are notoriously hated: bad service & prices…yet customers keep coming back because of the monopoly situation. Of course the underlying reasons behind the monopolies are different, and they may or may not be illegal, but the net effect is still the same: competition crumbles and the prominent players are propped up by their own monopoly rather than the quality of their service.
I accept that a benevolent monopoly can do good things, but I’m not really convinced that this should be the basis for justifying multi-trillion dollar corporate monopolies. Instead I feel we should be encouraging science and research more directly with grants, education, and other programs. Alas, I concede this is completely antithetical to the trump admin.
Hurting google is not really the aim; making everyone less dependent on monopolies should be. “Hurting google” might be a side effect of making the market more fair. If we don’t maintain a semblance of fairness and competition, the entire ethical foundation for capitalism collapses and we may as well just admit we are living under the rule of oligarchs and monarchs.
Utility markets in general trend towards monopolies without the need for deliberate monopolistic behaviour. This is due to the positive feedback, in a control theory sense, impact of scale advantage. However Google has absolutely engaged in illegal monopolistic behaviour as well, like paying billions for default search status on devices. IBM was also both a natural and deliberate monopolist and fought USA Gov in the courts for years. Ironically their battles all became mute then they were decimated by the advent of the microprocessor. The same could happen to Google due to the advent of AI search. Gemini is very hamstrung by censorship and could loose. In any case the winner will become another natural monopoly and the cycle will repeat. Once you achieve a natural monopoly the only way to grow bigger is unnaturally, i.e. illegally or through continuous self replacement innovation. The latter is where Google has fallen short. They were late out of the gate on AI. Their resident godfather didn’t see it coming and I suspect suffered a dissociative mental event as a result. He is now a complete pseudo babble AI doomsayer, https://www.youtube.com/watch?v=MGJpR591oaM .
Iapx432,
I agree, and that is part of my point.
Google is already struggling to make inroads with AI, and trying to hurt them when they are vulnerable, will cause more damage to products people benefit from.
Forget Google, it’s Microsoft that remains the big monopoly. First they went for Browsers, then game consoles, now AI and Telephones/Meetings. Cisco is rapidly losing marketshare to Microsoft Teams which basically ripped off Slack and bundled with Office to push itself on everyone. It’s the very definition of a monopoly using dominance in one field to force itself into others. Google’s market share is getting killed by AI. Mostly by AI controlled by Microsoft.
I think you could define monopoly as when customers are forced to use an obviously total crap product, i.e. Teams. MS is about to drop Skype and the Skype App cheerfully invites you to continue on Teams, except it is missing the core telephony functions. What an unfunny joke.
Don’t forget censorship. If Google won’t run ads on your site, you basically can’t run an ad supported site.
Unpopular opinion is that if we punish Google too much, we may end up destroying the Web. Like it or not, Google is one of the only companies which is trying to actively support a (semi) open web platform. All of the other Ad companies are very much trying to lock users into their platforms and provide an alternate internet platform (facebook, x/twitter, Weibo, etc.). Similar to the old AOL/Compuserve days, these platforms do more to lock users in than foster an open web. While Google is not perfect in its support, I fear the others will burn the web if it means more money for them.
Already to comply with the EU Digital Markets Act (DMA), Google Search in the EU removed Google Maps from their Search results. It’s not a user friendly way to do things. Before it was more convenient. We will get more of this probably.