After losing the lawsuit a month ago in the biggest US antitrust case in more than 20 years involving the search business, $Alphabet-C (GOOG.US)$ / $Alphabet-A (GOOGL.US)$ Antitrust lawsuits in the field of digital advertising are imminent.

On Monday, September 9, EST, the US Federal Court of Northern Virginia opened the second Google antitrust case. Judge Leonie Brinkema heard the plaintiff's court statement from the US Department of Justice. The Justice Department alleges that Google unlawfully controlled the software market for buying and selling digital ads, called ad technology, in an attempt to force Google to abandon its Ad Manager product. Some media pointed out that this case focuses on part of Google's advertising business worth 31 billion dollars. The business matches website publishers with advertisers, and the advertising technology stack determines which banner ads will appear on many websites on the Internet.

The Department of Justice said on Monday that Google used acquisitions of companies such as DoubleClick and AdMeld to eliminate the threat to its advertising business early on. Google's control over various technologies in the ad technology stack clashed. Such conflicts encouraged Google to conduct self-transactions. The Justice Department's indictment even listed the US Army as one of the advertisers hurt by Google's monopoly practices. The lawsuit alleges that the US government has spent 0.1 billion dollars to buy internet advertisements since 2019.

As the first witness to the Department of Justice, Tim Wolfe, head of revenue at the media company Gannett, testified in court this Monday that out of the 15 million dollars that publishers pay to ad technology companies each year, about 10 million dollars flows into Google, accounting for about one-third of this type of advertising technology expenditure.

Gannett said that publishers rely on Google's advertising tools, whether they're good or bad, and there are no other good alternatives, and trying to get rid of Google would be “a difficult task.”

The Justice Department's attorney, Julia Tarver Wood, told the judge,

The reason why Google is on the bench today is not because the company is huge, but because “they use scale to suppress competitors.” “Google's behavior is completely typical of monopoly behavior.”

Wood called Google's publisher ad server business, ad exchange platform AdX, and advertiser ad network a “triple monopoly,” saying “one monopoly is bad enough, but we are facing a triple monopoly.” Wood also said that in every line of business, Google has at least half of the market share, and by some measures, the share is even as high as 91%. “The rules are set so that all paths point to Google.”

Google responded on Monday that the US government's “unscrupulous” lawsuit with Google would lead to “absurd results,” and that they do not reflect the current state of contemporary internet advertising. In the documents submitted to the court, Google argued that the US Department of Justice's lawsuit focused too narrowly on website advertisements.

On Monday, Google also accused the US Department of Justice of exaggerating Google's market share. This share does not include competitors such as Amazon, Meta, Microsoft, and TikTok. If competition from other sources is included, Google's share of the ad trading market will be halved from 34% to 17%. Google says advertisers can choose to use Google's or rival tools, and can even shift ad spend from websites to other formats and platforms that don't involve Google's advertising technology, such as Instagram or Netflix.

Google's outside attorney Karen Dunn warned that if Google is judged to be split, it will only benefit other tech giants.

The trial of this case is expected to continue for four weeks. It is currently uncertain what specific penalties Google may face once the judge finally agrees with the US Department of Justice's accusations. If Google is forced to split its ad technology business, it could cause a reshuffle in the digital advertising industry.

As mentioned earlier, the focus of this case is Google's advertising tools, which are an important part of Google's $200 billion digital advertising business. These tools make it easy for ad buyers to buy ad places, and ad sellers, such as website owners, to sell their ad space. If the Department of Justice wins the case, it will at least seek to split the Google Ad Management Suite (GAM), and Google may also face numerous compensation lawsuits from advertisers.

Morgan Stanley believes that in the face of Google's monopoly in internet search and advertising, the US Department of Justice mainly focuses on solving three problems: competitive intensity, data scale advantage, and anti-competitive pricing. The Department of Justice is likely to seek further correction of Google's data advantage and anti-competitive pricing to encourage competitors to invest in the Internet search field, such as removing exclusivity clauses in adaptive search ads (RSA), allowing users to make screen selections, allowing access to Google's “click/query/user” data, and ad bid pricing controls.

On the day of the trial of the case this Monday, $Alphabet-C (GOOG.US)$ It opened high and went low. It rose more than 1.6% at the beginning of the session and then turned down in early trading. It fell nearly 2.6% during the day when the mid-day session was low, and eventually fell more than 1.3%, falling two consecutive trading days until closing on March 21.

Editor/Somer