The U.S. District Court for the Eastern District of Virginia is seen Monday, Sept. 9, 2024, in Alexandria, Va.
The U.S. District Court for the Eastern District of Virginia is seen Monday, Sept. 9, 2024, in Alexandria, Va.  Stephanie Scarbrough/AP

CNN- Google hasn’t just illegally cornered the market in search — it’s squeezed online publishers and advertisers with a “trifecta” of monopolies that have harmed virtually the entire World Wide Web, the US Department of Justice said Monday in a Virginia federal courtroom.

Kicking off a high-stakes trial that could reshape the basic economics of running a website, DOJ attorneys this week — along with 17 states — are trying to convince a federal judge that Google broke US antitrust law with its powerful advertising business.

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The long-awaited Google-DOJ showdown focuses on the $31 billion portion of Google’s ad business that matches website publishers with advertisers. This “stack” of technologies determines what banner ads appear on countless sites across the web.

The Biden administration’s lawsuit, filed in 2023, claims Google has used anticompetitive mergers, self-dealing and auction manipulation to reduce competition and cement its dominance, resulting in higher prices for publishers and advertisers.

“Google is not here because they’re big,” Julia Tarver Wood, a senior DOJ attorney, told District Judge Leonie Brinkema in the trial’s opening minutes Monday. “They’re here because they use that size to crush competition.”

Google has not shied away from the fight. The US government has “gerrymandered” its way to a court case, the company responded on Monday, leading to “absurd results” that don’t reflect the modern realities of internet advertising.

The government’s lawsuit “is like a time capsule, where if you break it open there would be a BlackBerry, an iPod and a Blockbuster Video card,” said Karen Dunn, Google’s high-powered outside attorney who delivered the company’s opening statement before racing out to prep Vice President Kamala Harris for her Tuesday debate with former President Donald Trump.

This month’s closely watched Google ad tech trial comes weeks after another federal court handed Google what may be its biggest court defeat in company history, when a federal judge sided with state and federal officials and ruled its flagship search engine an illegal monopoly.

Now, the Justice Department is hoping for a twofer.

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Google’s search engine may have been the killer app that made it a daily destination for millions of consumers, but it was the company’s advertising technology that helped Google monetize much of the rest of the web — and Google took illegal steps to thwart competition in that space, according to the states and DOJ.

Attorney Karen Dunn (3rd L) of Google’s defense team leaves the Albert V. Bryan United States Courthouse on September 9, 2024 in Alexandria, Virginia. The Justice Department is charging Google in an antitrust case challenging the practice in its ad-tech business violating antitrust laws.
Attorney Karen Dunn (3rd L) of Google’s defense team leaves the Albert V. Bryan United States Courthouse on September 9, 2024 in Alexandria, Virginia. The Justice Department is charging Google in an antitrust case challenging the practice in its ad-tech business violating antitrust laws.  Alex Wong/Getty Images

From gobbling up ad-tech rivals through anticompetitive mergers to bullying businesses into using Google’s ad products, to controlling key businesses in each part of the ad-tech stack, the governments say, Google drove up prices for advertisers and choked off revenue for websites.

Tim Wolfe, a revenue executive at the media company Gannett and DOJ’s first witness, told the court that of the $15 million in fees that the publisher of USA Today pays to ad-tech companies every year, about $10 million, or two-thirds, goes to Google.

For better or for worse, he said, publishers are dependent on Google’s advertising tools, have no good alternatives to it and that it would be “a heavy lift” to try to switch away.

The company used acquisitions of companies such as DoubleClick and AdMeld to kill off threats to its advertising business early on, DOJ said Monday, and that Google’s control of multiple technologies in ad-tech stack creates conflicts that encourage Google to self-deal.

The complaint even names the US Army as one of the advertisers allegedly harmed by Google’s practices. The US government has spent $100 million since 2019 on buying internet ads, according to the lawsuit.

“One monopoly is bad enough, but a trifecta of monopolies is what we have here,” said Wood, the DOJ attorney, referring to Google’s publisher ad server business, its advertising exchange AdX, and its advertiser ad network. In each line of business, Wood said, Google has at least half, and by some measures as much as 91%, of the market. “The rules are set such that all roads lead back to Google,” Wood added.

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Authorities have called for that group of businesses within Google — which is distinct from Google’s search or search ads business — to be broken up.

The ad tech case is the second of two DOJ challenges to Google’s power since the Trump administration, and the latest test of a renewed US commitment to enforcing the nation’s competition laws. But for Google, which has denied monopolizing the ad tech industry, the case is an assault on what it says are essential tools for small businesses and publishers.

Google has described the online advertising industry as vibrant and competitive, calling the government suit filed last year a misguided attempt to pick winners and losers.

In its court filings, Google has argued the DOJ suit focuses too narrowly on website advertising. On Monday, Google accused DOJ of overstating the company’s marketshare based on excluding rivals such as Amazon, Meta, Microsoft and TikTok. Advertisers can choose whether to use Google’s tools, or rival tools, or even divert ad spend away from websites and to other formats and platforms that don’t involve Google’s ad tech, such as on Instagram or Netflix, Google has said.

Factoring in those other sources of competition drops Google’s share of the ad exchange market from 34% to 17%, said Dunn, Google’s attorney. And if Google is broken up, she warned, it will only benefit other Big Tech giants.

“As apps become more important to digital content providers,” Google wrote in a pre-trial filing, “the amount of inventory they sell through apps, and ad tech spending to manage that inventory, increases.”

Both sides gave opening statements on a clear, sunny day at the US District Court for the Eastern District of Virginia. Sitting on the dais was Brinkema, who listened quietly except to ask a rare follow-up question or to hurry things along. A Clinton appointee, Brinkema is a former Justice Department attorney who, as a judge, has also presided over numerous terrorism- and immigration-related cases.

During the Google case, Brinkema has made clear her preference for efficiency. When the Justice Department asked for a 10-week trial, she pushed for six. And on Monday, when a Google attorney kept trying to ask the same question of a witness two different ways, she interjected: “I’m going to sustain the objection before I even hear it. Let’s move it along.”

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The multi-week trial could feature witness testimony from high-profile partners of Google as well as its critics. The list of potential witnesses includes current or former executives from Comcast, Disney, The New York Times and Meta, along with some high-ranking Google employees, such as YouTube CEO Neal Mohan.

That arrangement has harmed publishers and advertisers to the tune of hundreds of millions of dollars in extra fees since 2019, according to estimates in a pre-trial filing by DOJ.

For its part, Google has argued in its filings that the price of advertising continues to fall industry-wide and that its own market share in the display advertising market has been “steadily declining since 2013.”

It’s not certain what specific penalties Google could face if Brinkema ultimately agrees with the DOJ. The trial beginning Monday is merely a first step to determine whether Google broke the law. Still, a breakup of Google’s ad tech business could potentially trigger a shakeup of the digital advertising industry and Google’s role within it.

The US government believes a breakup would create new or different financial incentives for everyone in the market. But Google has argued it might instead harm smaller websites that rely on its tools, or merely serve to benefit other large, established giants in the digital ad industry.

CNN.com