Now Google is getting down to business: the US Department of Justice and eight US states have filed lawsuits against the Internet company because they see the company’s dominance in the area of online advertising as an illegal monopoly of market power. The aim is to break up Google’s advertising business.
According to CNBC, the US Department of Justice has filed a lawsuit against Google and its parent company Alphabet for allegedly illegally abusing its market power in the online advertising market. The agency filed its lawsuit in Virginia in federal court, with New York, California, and Virginia, among others, also joining the lawsuit.
It is the first time that the US administration under Democratic President Biden has filed a lawsuit against a technology company after the corresponding investigations had already begun under the previous administration under Republican Trump. In addition, this is one of the few cases in which the US government has attempted to break up a large company.
Google markets and distributes the advertising
Google is the most important provider in the market for online advertising in the USA, which is currently said to have a volume of almost 280 billion dollars. The Group, therefore, controls the technology used to sell, buy and distribute online advertising. It will probably take several years for the process to come to an end.
The US Department of Justice’s lawsuit essentially mirrors what is already happening at the regional level in a number of US states: there are a number of similar lawsuits alleging that Google abused its market power and forked its online advertising business want to enforce. Such a process began in New York in 2020 before a federal court in which 16 states are involved.
Advertising is Google’s main source of income
Google makes tens of billions of dollars in online advertising sales every year. Among other things, the company operates marketplaces in which advertising space on various external websites and on Google’s own offers are auctioned off with the help of automated systems. The group also supplies the infrastructure via which the advertising is then delivered on the respective websites.
According to market research companies, Google currently has a market share of around 26.5 percent in the USA. Although the group had a significantly higher market share a few years ago, at a good 37 percent, investigators from the US government still accuse the group of exploiting its continued enormous market power in order to impede the business of competitors.
Google keeps arguing that the US market for online advertising is actually very competitive and there is plenty of competition because other companies like Microsoft, Amazon and Meta (Facebook) are also involved. Meanwhile, there are a few other areas where US competition watchdogs believe Google is acting as a monopolist and impeding competition. The group is also threatened with trouble because of Android.
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