When Americans think of Google, most are likely to think of products we use every day, like a search engine that is so ubiquitous that “Google” is a verb in dictionaries. They know Google Maps and Gmail and the Chrome browser. Some may even think of YouTube, which Google bought in 2006. But Google is mostly just a giant advertising conglomerate. The tech giant gets 80 percent of its revenues not through well-known products but by acting as a middleman standing between publishers selling digital ad space and marketers trying to reach audiences online.
On Tuesday, the Department of Justice (DOJ) Antitrust Division attacked this very core of Google’s business model, charging in an antitrust suit filed in Virginia that the tech giant is stealing resources from news organizations and other publishers as well as from advertisers by abusing its market power in digital advertising. To break up its near monopoly, DOJ, along with eight states, including New York and California, wants Google to unload its so-called “ad tech platforms,” which are digital exchanges it controls for buying and selling ads on the internet.
The theory of the case echoes a theme long championed by this magazine that we want to note at this historic moment. As Phillip Longman wrote in “Starving the News” in 2020, Google’s cornering of the digital advertising market has eroded the financial foundations of an independent press in America, destroying tens of thousands of journalism jobs and bringing about the near demise of local journalism. Google could pull this off not because of technological genius but because the federal government, during successive Republican and Democratic administrations, failed to enforce antitrust laws and regulations that Washington once used regularly to stimulate robust competition between communications networks and media markets. Broadcast networks remained, for instance, limited in the number of stations they could own and operate, just as movie studios are not allowed to own theatre chains. The arguments in Longman’s piece are echoed throughout the DOJ’s brief.
To make it right, Longman argued, the government simply needs to reapply those traditional policies, which is what the DOJ is doing in a big way with this suit. If successful, the implications could be enormous for print and broadcast media, returning to their parched coffers the revenue stream that’s been diverted to Google.
Google’s domination of the ad business has aimed at the primary revenue stream for most news outlets: advertising. As Longman noted in his piece, advertising made possible publications as diverse as the abolitionist North Star, founded by Frederick Douglass, and Rolling Stone, CBS News, and your local alt-weekly. Publications would sell ads, and companies looking for buyers of their goods and services would place them.
As the internet expanded at the turn of the century, and advertisers counted on third parties to place their ads where the most lucrative readers or viewers were, the press continued to do well, as did a burgeoning blogosphere. Journalistic entrepreneurs could take advantage of a low barrier to entry and earn a decent living off of digital advertisers.
That changed. In 2007, Google bought one of the big third-party companies, DoubleClick, for over $3 billion. Longman notes that although Google promised not to use the massive trove of user data it was hoovering up through Gmail, search, maps, and so on to bolster its ad business, it reneged on that deal. Now Google has a distinct advantage over other ad managers, with more leverage over publications as well as anyone wanting to place an ad.
It got worse after 2007 as Google purchased more and more ad-tech-related companies. Today, Google owns the ad exchange AdX, a platform that serves publishers called Google Ad Manager, a platform for large advertisers known as DV360, and another for small advertisers named Google Ads.
The lawsuit argues that by inserting itself in all aspects of what marketers call the “supply chain” of digital advertising, Google achieved a dominant position that helped it lock publishers into using its ad tech tools. By operating ad tech designed for both publishers and advertisers, Google has operated as a “black box,” where advertisers have little visibility of where their money goes and where ads are published. Pretty soon, it got to the point where if you wanted to sell ads for your publication, all the market incentives were for you to go to Google.
According to the Justice Department, the Mountain View, California–based giant took hefty fees and stole revenue from media outlets. The lawsuit asks the court to end Google’s “anticompetitive acquisitions,” including its DoubleClick purchase. It also calls for the divestiture of its ad exchange.
“For 15 years, Google has pursued a course of anticompetitive conduct that has allowed it to halt the rise of rival technologies, manipulate auction mechanics, insulate itself from the competition, and forced advertisers and publishers to use its tools,” Attorney General Merrick Garland said on Tuesday. “Google has engaged in exclusionary conduct that has severely weakened if not destroyed competition in the ad-tech industry.”
Last year, to forestall a suit like this, Google offered to place parts of its ad-tech business into a separate company under the tent of its parent company, Alphabet. The Justice Department balked at the offer.
Not surprisingly, Google is vowing to fight the lawsuit just as it has battled suits aimed at its domination of the search market and the antitrust efforts of European regulators. The legal process could take years, and its outcome is uncertain. But the suit is important because it can reverse years of print and broadcast decline and signals that Washington is seriously back in the antitrust business. It is also a point of great pride for the Washington Monthly, which has been committed to fighting monopolies, and whose writers, especially Longman, have done so much to provide the intellectual legwork that made this moment possible.
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