Opinion | Why this Google antitrust lawsuit has promise

When most Americans think of Google, they think of a search-engine behemoth, and of course, they’re right. Yet unlike another DOJ case brought under the previous administration, the latest lawsuit doesn’t focus on the power the company holds over what we look for on the internet. Instead, it focuses on what we don’t go looking for and see anyway: advertisements. The argument is relatively straightforward: Google dominates this market by playing a key role in the technology at every point along the “ad stack.” In a nutshell, this is how it works:

So what’s the problem? The Justice Department says Google has monopolized the advertising market as a whole, exploiting control over every point in the ad stack to exert its hold on every other aspect and to extract inflated fees from website publishers and advertisers along the way. What’s interesting about this argument is in part how uninteresting it is compared with others that the government has made recently: no attempts to claim that competition for competition’s sake, rather than merely consumer welfare, demands protection; no stab at preventing consolidation in a market that doesn’t even exist yet.

This is good, old-fashioned antitrust enforcement. The contention is that by owning all these tools and then abusing that concentration, Google has caused prices to increase — and those hikes, eventually, are passed on to consumers. Granted, proving that prices did rise above what they would have been absent Google’s allegedly anticompetitive behavior isn’t easy. But if the DOJ can manage to do so (a similar case filed in 2020 by state attorneys general in 16 states plus Puerto Rico is pending in New York), the judge won’t be able to shrug and ask, “So what?”

Still, challenges loom. Google’s market share of digital ad spending is 26.5 percent, plus 2.9 percent from YouTube. That’s down from 37.4 percent at its peak. Rivals including Amazon, TikTok, Hulu and Roku are on the rise. Google points out that advertisers and publishers are increasingly mixing and matching the technologies they buy and sell on, rather than opting for one company’s offerings alone. The company also disputes many of the charges about its conduct contained in the complaint. And there’s another snag: Some of these charges would be manifestly illegal if proved — such as imposing contractual constraints that prevent trading partners from dealing with rivals. Others, however, wouldn’t.

Some of those practices reside in the liminal space of still-developing law: For example, has Google been deceptive about the way it runs its ad exchange? Others, the courts have generally interpreted not to be illegal at all: self-preferencing, for instance, by giving one’s own products a leg up over third parties, as Google is accused of doing by allowing its ad exchange a “last look” chance to match any winning ad bid. (Google says this practice was always misunderstood, and it has now been phased out.)

The same goes for whether there is a duty to deal with rivals. Right now, the DOJ alleges, Google bids on its own exchange, AdX, on behalf of Google Ads customers far more than it bids on third-party ad exchanges. Of course, this gives its exchange an advantage because it’s the only exchange that can effectively capitalize on the demand to advertise alongside its extremely popular search engine. But, again, courts have held that there’s nothing illegal about Google hoarding the demand it has acquired versus sharing it with competitors.

Put these two things together, and they’re crucial to Google’s dominance. Advertisers rely on AdX because they rely on Google Ads. Publishers rely on AdX because that’s where all the ads are. And, finally, publishers also rely on the tool formerly known as DoubleClick because its close connection to AdX makes it the most convenient way to secure the best price for their ad space. This situation isn’t illegal, at least as far as courts have been concerned. But is it healthy?

This isn’t a simple question to answer. The Justice Department case obviously has the potential to curb practices already recognized as abusive, and it may even have the potential to push legal doctrine toward recognizing additional practices as abusive, too. But in the end, no one is forcing advertisers and publishers to use Google’s advertising services. They’re choosing to because it makes sense in the era of the network effect, when the more that people use a service, the more valuable the service becomes, leading more people to use the service, and so on. And unless the DOJ can prove that this choice is the cause of a less efficient market, it’s going to have a hard time persuading any judge to order its proposed remedy of a breakup.

If that’s unsatisfying to Congress, the public or anyone who believes that so much concentration of power in the hands of one company is simply dangerous — well, then, we need new laws. By operating within traditional antitrust frameworks but nudging at their edges, the Justice Department will end up encouraging everyone to confront the status quo’s capabilities and its limits alike. In that sense, win or lose, it may have brought the most valuable tech competition case yet.