Justice Department Takes on Google’s Ad Business Split

Alongside eight states, the US Department of Justice is suing Google to break up the company’s advertising business. In a complaint filed Tuesday with a federal court in Virginia, the agency accused Google of illegally monopolizing the digital advertising market. “Google’s anticompetitive behavior has raised barriers to entry to artificially high levels, forced key competitors to abandon the market for ad tech tools, dissuaded potential competitors from joining the market, and left Google’s few remaining competitors marginalized and unfairly disadvantaged,” the Justice Department alleges.

As Bloomberg notes, the lawsuit represents the Biden administration’s first significant attempt to challenge the power of one of the nation’s largest tech firms. The agency previously sued Google in 2020. At the time, the Justice Department, under Attorney General William Barr, said the company had a monopoly over search and search-related advertising. It also took issue with the terms around Android, which the Justice Department said unfairly advantage Google by forcing manufacturers to preload their devices with the company’s applications and search engine.

Google faces intense regulatory scrutiny over its hold on the digital advertising market. In 2020, Texas filed a multi-state lawsuit accusing the company of using its “monopolistic power to control” ad pricing. One year later, the European Commission opened a probe into the company’s advertising business, a move that seems to have forced Google to reconsider how it handles ads on YouTube.

Google accused the agency of “attempting to rewrite history at the expense of publishers, advertisers and internet users.” Specifically, Google says it takes issue with the Justice Department’s demand that the company spin off AdMeld and DoubleCheck, two ad tech firms Google acquired more than a decade ago. Additionally, Google contends competition in the ad tech sector has increased significantly in recent years.

One estimate suggests Google controls as much as 26.5 percent of the US digital ads market. The company’s ad unit is expected to generate about $73.8 billion in US ad revenue over the next year, with much of that money coming from search advertisements.

Update 4:04PM ET: Added more context from Google.