A federal judge ruled on Thursday that Google illegally monopolised key segments of the online advertising technology market, marking a significant setback for the tech giant’s digital advertising dominance.

Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia found Google guilty of maintaining monopoly power in markets connecting advertisers and publishers.

The court determined that Google’s control over publisher ad servers and ad exchanges violates U.S. antitrust laws, representing the company’s second major legal defeat following a previous case that found its online search dominance to be monopolistic. Judge Brinkema’s ruling specifically highlighted Google’s anticompetitive practices in acquiring and maintaining monopoly power within the open-web advertising ecosystem.

According to the court documents, Google’s integration and contractual tying of its publisher ad server and ad exchange products effectively eliminated competition, resulting in reduced revenue for publishers and increased costs for advertisers. The ruling cited Google’s use of its DoubleClick platform and other ad technology assets as mechanisms that suppress competition, violating Sections 1 and 2 of the Sherman Act.

The U.S. Department of Justice, alongside 17 states, initiated the lawsuit in 2023 to challenge Google’s powerful advertising business. The Justice Department is now seeking remedies that could force Google to divest or restructure its ad technology operations, including the Google Ad Manager platform, which generates approximately 12% of Alphabet’s total revenue.

Google’s vice president for regulatory affairs responded to the ruling by highlighting the company’s victories on key aspects of the case, including the rejection of claims related to advertiser tools and acquisitions. However, she expressed disagreement with the court’s findings regarding publisher-side tools, maintaining that publishers have multiple alternatives and choose Google’s services for their simplicity, affordability, and effectiveness.

The ruling carries significant implications for the digital advertising industry, which supports much of the internet’s free content. Websites depend heavily on ad technology platforms to monetise their content through advertising space sales. Industry experts note that Google’s market dominance has raised substantial concerns about fair competition and innovation in the digital advertising space.

Legal analysts view this decision as part of a broader shift in U.S. antitrust enforcement targeting major technology companies. With Google already confronting demands to divest portions of its search business, this latest ruling intensifies pressure for regulatory actions that could fundamentally alter its advertising operations.

As the court moves forward to determine penalties and remedies, potential outcomes could include mandatory divestment of ad technology assets or modifications to Google’s product integration practices. These changes aim to promote increased competition in the digital advertising marketplace while the company continues to face parallel legal challenges to its search monopolies.

The antitrust ruling represents a pivotal moment for Google’s core revenue streams and could trigger significant restructuring within the digital advertising ecosystem. The industry remains focused on how this landmark case will evolve and its implications for competition and consumer choice in the online advertising landscape.

News Source: CNBC