By Nathalie Voit
A Texas-led coalition of state attorneys general accused Google of attempting to rig the online ad market and striking an illegal arrangement with Facebook in an amended antitrust lawsuit filed in the Southern District of New York on Jan. 14, The Wall Street Journal reported.
The lawsuit, initially filed in Dec. 2020, accused the search giant of illegally running a monopoly in the market for digital advertising for over a decade. The suit claims Google used its dominant position in the marketplace to preference its products and suppress competition from rivals.
“As the gateway to the internet, Google has systematically degraded the ability of other companies to access consumers,” the complaint said.
“In doing so, just as Microsoft improperly maintained its monopoly through conduct directed at Netscape, Google has improperly maintained and extended its search-related monopolies through exclusionary conduct that has harmed consumers, advertisers, and the competitive process itself.”
Google’s ability to maintain a search-related monopoly is possible because the company owns “the dominant tool at every link in the advertising chain,” according to The Journal. Due to Google’s outsize role as both broker of digital ad sales and participant, it can leverage its power to coerce publishers and advertisers into using its platforms.
“Google uses its gargantuan collection of data to strengthen barriers of expansion and entry, which blunts and burdens firms that threaten its search-related monopolies (including general search services, general search text advertising, and general search advertising),” the suit contended.
The complaint also provided unredacted details regarding a series of programs that Google secretly ran from 2010 to 2019 named Project Bernanke.
The states allege the search service monopoly manipulated its ad pricing tiers in a way that hurt revenues for some companies while raising prices for buyers. Google then “pocketed the difference between what it told publishers and advertisers that an ad cost and used the pool of money to manipulate future auctions to expand its digital monopoly,” the amended suit said.
According to the complaint, Google misled advertisers and publishers into believing they were participating in a “second-price ad auction,” when in fact, Google’s advertising exchange, AdX, would at times remove the second-place bid. The practice would allow Google to pocket part of the difference between the first and third-highest bid while depriving the publisher of ad revenue.
The complaint also said Google and Facebook illegally collaborated to reduce prices paid to publishers, stamp out rival ad networks, and manipulate tech ad auctions. The new filing said that Alphabet and Google Chief Executive Sundar Pichai and Meta Platforms Inc. Chief Executive Mark Zuckerberg signed off on a 2018 deal that ensured Facebook would win in a fixed percentage of Google-run ad auctions.
The lawsuit claimed Google initiated the business agreement to rein in Facebook as a threat after the company signaled its intention to help publishers and advertisers bypass Google-imposed fees for advertising through its services.
The documents cited internal correspondence between Google employees saying Project Bernanke should be based on “smarts and tech” rather than “insider information.” Another Google worker said the program “makes the auction untruthful as we determine the AdX revshare after seeing buyers’ bids” in a newly unredacted section of the complaint.
A representative for Google said Friday that the company would file a motion to dismiss next week and that the case remains “full of inaccuracies and lacks legal merit,” CNBC reported.
