A federal judge has ruled that Google maintained illegal monopolies in the digital advertising technology market.
In a landmark case, the Department of Justice and 17 states found Google liable for antitrust violations.
Federal Court Finds Google Violated Sherman Act
U.S. District Judge Leonie Brinkema ruled that Google illegally monopolized two key markets in digital advertising:
- The publisher ad server market
- The ad exchange market
The 115-page ruling (PDF link) states Google violated Section 2 of the Sherman Antitrust Act by “willfully acquiring and maintaining monopoly power.”
It also found that Google unlawfully tied its publisher ad server (DFP) and ad exchange (AdX) together.
Judge Brinkema wrote in the ruling:
“Plaintiffs have proven that Google possesses monopoly power in the publisher ad server for open-web display advertising market. Google’s publisher ad server DFP has a durable and ‘predominant share of the market’ that is protected by high barriers both to entry and expansion.”
Google’s Dominant Market Position
The court found that Google controlled approximately 91% of the worldwide publisher ad server market for open-web display advertising from 2018 to 2022.
In the ad exchange market, Google’s AdX handled between 54% and 65% of total transactions, roughly nine times larger than its closest competitor.
The judge cited Google’s pricing power as evidence of its monopoly. Google maintained a 20% take rate for its ad exchange services for over a decade, despite competitors charging only 10%.
The ruling states:
“Google’s ability to maintain AdX’s 20% take rate under these market conditions is further direct evidence of the firm’s sustained and substantial power.”
Illegal Tying of Services Found
A key part of the ruling focused on Google’s practice of tying its publisher ad server (DFP) to its ad exchange (AdX).
The court determined that Google effectively forced publishers to use DFP if they wanted access to real-time bidding with AdWords advertisers, a crucial feature of AdX.
Judge Brinkema wrote, quoting internal Google communications:
“By tying DFP to AdX, Google took advantage of its ‘owning the platform, the exchange, and a huge network’ of advertising demand.”
This was compared to “Goldman or Citibank own[ing] the NYSE [i.e., the New York Stock Exchange].”
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What’s Next?
Judge Brinkema has yet to decide on penalties for Google’s violations. Soon, the court will “set a briefing schedule and hearing date to determine the appropriate remedies.”
Possible penalties include forcing Google to sell parts of its ad tech business. This would dramatically change the digital advertising landscape.
This ruling signals that changes may be coming for marketers relying on Google’s integrated advertising system.
Google intends to appeal the decision, extending the legal battle for years.
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Source: Google Found Guilty of Illegal Ad Tech Monopoly in Court Ruling
Robin Edgar
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