Hoping to break up Google’s ad tech service, the Department of Justice (DOJ) recently filed a lawsuit against Google. It claims that Google abuses its monopoly on online advertising technology and has stifled its competition — disadvantaging website publishers and other online advertisers.
If successful, this suit will likely discourage investment and result in less innovative and efficient services. Instead of dragging Google to court, the DOJ should let the competitive digital advertising market continue to serve consumers.
In its complaint, the DOJ says that Google has been engaging in anticompetitive and exclusionary conduct that “neutralizes” or “eliminates” ad tech competitors through acquisitions, forcing publishers and advertisers to use its products and thwarting their ability to use competing products. It also alleges that in pursuit of outsized profits, Google has ultimately “weakened the free and open internet and increased advertising costs for businesses” and “snuffed out innovation.”
The first matter to address is whether Google does, in fact, have a monopoly over the digital advertising market. The U.S. market for digital ads is worth roughly $250 billion as of 2022, and very little evidence suggests Google “wields dominance.”
Google holds 26.4% of the market while the other biggest players, Facebook and Amazon, hold 24.1% and 14.6%, respectively. Google’s share is down more than 10 percent from its peak in 2015. Amazon is the fastest-growing competitor and other companies have been growing their market share as well.
Competition abounds in the ad tech space — a state that wouldn’t be possible if Google were a true monopolist. The accusation that Google’s practices force publishers and advertisers to use its products is simply false.
Google doesn’t require that advertisers or publishers use Google’s whole ad “stack.” Instead, they pick and choose what works best for their needs. Publishers and advertisers often use multiple technologies simultaneously to maximize their advertising reach. The average large publisher utilizes six different platforms to sell its ads.
Nor is there any truth to the argument that advertisers are effectively forced by the availability of limited competing products. Over 80 rival platforms exist for publishers, and over 700 rival platforms for advertisers.
Despite the DOJ’s vilification of Google, publishers themselves tend to view Google with a white hat, according to Advertiser Perceptions president Kevin Mannion. Reasons for their praise of Google’s Ad Manager include its seamless integrations, constant tech updates and access to the Google AdX — an exchange network that gives publishers a large pool of demand through campaigns from worldwide brands and advertisers.
Publishers and advertisers choose Google because they deem it most effective and efficient service for their efforts. Much of that effectiveness can be attributed to its technology. According to a survey in 2020, 78 percent of publishers gave Google Ad Manager the highest rating for “superior technology position” within the ad tech market.
Critics also voice complaints about Google’s ad tech fees. These critics ought to consider the price relative to other companies and their comparable merits. Google’s ad tech fees are lower than the industry average of 32.6% of ad spending. In 2019, publishers using Ad Manager kept over 69 percent of the total amount advertisers paid when using Google Ads to buy their display inventory. In some cases, publishers can make far more.
In summing up the benefits that the revenue they receive from such fees facilitates, Google claims that it helps fund state-of-the-art data centers, investment in computer science research to identify the most useful and relevant ads, innovation that increases publisher revenue, maximization of advertiser return on investment and keeping free and open access to the web for everyone.
If the federal government regulates Google’s fee, publishers, advertisers and consumers can expect fewer of these benefits, lower quality services and higher advertising costs.
Breaking up Google’s overall ad tech infrastructure by pulling back Google’s acquisition of AdMeld and DoubleClick would have notable negative effects. In a statement responding to the introduction of The Competition and Transparency in Digital Advertising Act, Google claims “advertising tools from Google and many competitors help American websites and apps fund their content, help businesses grow, and help protect users from privacy risks and misleading ads.”
The company went on to state that “breaking those tools would hurt publishers and advertisers, lower ad quality, and create new privacy risks. And, at a time of heightened inflation, it would handicap small businesses looking for easy and effective ways to grow online. The real issue is low-quality data brokers who threaten Americans’ privacy and flood them with spammy ads.”
3 in 4 businesses that use Google’s ad tech in Australia have reported benefits of growth and cost and time savings. It’s likely that American businesses see the same value in Google’s ad tech. With more growth, productivity can increase to meet consumer demand, and cost and time savings will mean lower prices for consumers. Efforts that would roll back long-term investments would only discourage the development of those benefits.
The DOJ’s agenda against Google’s ad tech enterprise is disconnected from the realities of the ad tech market, its current competitive environment and industry standard practices. The digital advertising landscape is already rapidly evolving, thriving in competition and bringing innovative and efficient services to publishers and advertisers. The DOJ should refrain from targeting Google’s ad technology. Doing so would manipulate this already highly dynamic sector.