Google faces its next major antitrust test

Marta Biino
·3 min read

The News

Google’s latest antitrust trial began Monday. It’s the tech giant’s second turn in the courtroom this year, and this time the issue at stake is its sprawling ad business.

The US Department of Justice alleges Google operates an illegal monopoly over online advertising through Google Ad Manager, which websites use to sell ads on their pages. Digital ads account for some $200 billion of Google’s business.

The trial comes after a federal judge ruled earlier this year that Google holds an illegal monopoly over online search, a decision that could ultimately lead to the breakup of the tech behemoth. Together, these cases’ outcomes could reshape the US tech industry and how the internet works.

The Justice Department alleges that Google’s ad business locked websites and advertisers into using its suite of tools, leading to higher prices for advertisers and lower returns for website publishers, along with a worse experience for users.

One Google executive once described the process as similar to “if Goldman or Citibank owned the [New York Stock Exchange]” in an internal email cited in court filings.

SIGNALS

Regulation in US and EU may not move fast enough to keep up with tech

Sources: The Conversation, Politico

This case against Google is part of a slew of antitrust lawsuits the US has recently brought against big tech companies in an apparent attempt to catch up with the EU’s long-standing efforts to regulate anticompetitive behavior in the industry, a legal expert wrote in The Conversation. The EU has led the charge, bringing multiple successful actions against Microsoft, in particular, and enacting two laws that threaten large fines or even interdicts against tech companies that don’t comply with their terms. But questions remain about whether such efforts can ever move “fast enough, and with enough force, to truly reshape some of the world’s largest and most dominant companies,” Politico wrote.

Tech investors could see more cause for worry

Sources: The New York Times Dealbook, The Washington Post

Google’s trial is the latest tech industry development to put already spooked investors “on edge,” The New York Times’ Dealbook newsletter wrote. Google’s shares have lost about 20% of their value after hitting a record high in July. Tech stocks in general have taken a beating in recent months as anxiety mounts over whether companies’ sizable investments in artificial intelligence will pay off any time soon, as well as broader concerns over the US’ seemingly slowing economy. The tech-heavy Nasdaq Composite index dropped 6% last week, its worst performance in almost three years.

The future of artificial intelligence is also at stake

Source: Digiday

While the Department of Justice’s case will examine Google’s ad business, the company also plays an outsized role in the development and growth of artificial intelligence, ad-tech experts told Digiday. Many AI startups, including industry darlings like OpenAI and Perplexity, rely on Microsoft and Google’s search capabilities and their ads to get new information, with a recent report finding that while 16% of users make searches using AI chatbots, 99% report using search engines. Google could also leverage its dominance in digital advertising to provide some AI-powered ad-tech tools for free, which could hurt smaller or medium-sized agencies specializing in those types of services.