Google abusively charges more than twice its rivals for online ads, new lawsuit says

Google abusively charges more than twice its rivals for online ads, new lawsuit says
·3 min read

Google uses its dominant position in the marketplace to take a cut of 22-42% on every ad bought in its system, typically double or quadruple what other digital advertisers charge, according to a lawsuit unredacted on Friday filed by 16 state attorneys general.

Google makes most of its money through its ad exchange, a marketplace for ad buyers and sellers facilitated by the search giant's massive amount of user data, and the antitrust lawsuit claims that Google is abusing its position in the market to unfairly net itself higher profits.

"Google owns the largest buy-side and sell-side brokers," one senior Google employee admitted in evidence gathered within the suit, "[t]he analogy would be if Goldman or Citibank owned the NYSE."

Google, which is the most visited website in the United States with billions of users worldwide, controls two of the biggest third-party ad companies on the internet, and Google's subsidiary YouTube accounts for 43% of the online video advertising market. Due to so many people using YouTube, advertisers consider it a "must have," according to the suit.

Big Tech companies such as Google, Facebook, Apple, and Microsoft also met in 2019 to discuss ways to go about "forestalling consumer privacy efforts," the states allege.

STATES TAKE LEAD FROM CONGRESS ON REINING IN BIG TECH

Google says the claims in the suit are misbegotten.

“This lawsuit is riddled with inaccuracies and our ad tech fees are actually lower than reported industry averages,” a Google spokesman said Friday.

"There is vigorous competition in online advertising, which has reduced ad tech fees, and expanded options for publishers and advertisers," Google added in a statement.

The lawsuit, which is being led by Texas state attorney general Ken Paxton, alleged that the tech giant has found ways to draw in online advertisers and content publishers and enable the company's ad-purchasing tools to garner more than 80% of the ads sold on its own exchange.

Google documents cited in the suit show that the company provided 75% of all online ad impressions in the U.S. in the third quarter of 2018.

Google's ad bidding is a system in which websites and publishers auction off ad space on their sites or in their apps and, in doing so, share user data, including browsing history, location, device IDs, and other relevant online user behavior, to hundreds of different advertising technology companies Google works with.

Two of the biggest third-party ad companies on the internet, AdMob for phone apps and Ad Manager (formerly DoubleClick) for web browsing, have been purchased by Google and so the company profits from their dominance in the ad market.

Big Tech critics say that the lawsuit provides more fuel to the fire of their efforts to regulate and possibly even break up tech giants like Google.

"There is legislation currently under consideration that can prevent this from happening again," said Mike Davis, president of the conservative advocacy group the Internet Accountability Project.

"The American Choice and Innovation Online Act, recently introduced by Senators Chuck Grassley (R-IA) and Amy Klobuchar (D-MN), would free up competition for these small companies to compete with Big Tech monopolists like Google. Its bipartisan companion bill already passed the House Judiciary Committee. If we've learned anything from this complaint, it's that we need antitrust legislation now," he added.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

Google plans to file a motion to dismiss the allegations against it and the lawsuit will proceed in New York federal courts over the coming months.

Washington Examiner Videos

Tags: News, Policy, Google, Advertising, Monopoly, Big Tech, Attorney General

Original Author: Nihal Krishan

Original Location: Google abusively charges more than twice its rivals for online ads, new lawsuit says

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting