Google might have to sell off some of its businesses after a judge makes a critical ruling
A ruling made by a US federal judge this morning could help the Justice Department decide to force Google to break up its online advertising businesses. District Judge Leonie Brinkema, of the US District Court for the Eastern District of Virginia, ruled that Google illegally dominated two markets for online advertising that combined to generate billions in revenue for Alphabet last year.
Judge Brinkema said that Google was liable for "willfully acquiring and maintaining monopoly power" in the online publisher ad server market, and in the ad-exchange market that connects ad buyers with ad sellers. "Google further entrenched its monopoly power by imposing anticompetitive practices on its customers and eliminating desirable product features," the judge added in her decision.
Google did score a moral victory when the judge ruled that the DOJ failed to present enough evidence for her to rule that Google had a monopoly in the advertiser ad networks segment of the online advertising market. Google jumped on that victory to claim a partial win and said that it would challenge the rest of the judge's rulings.
"We won half of this case and we will appeal the other half. The Court found that our advertiser tools and our acquisitions, such as DoubleClick, don’t harm competition. We disagree with the Court’s decision regarding our publisher tools. Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective."
-Lee-Anne Mulholland, Google’s Vice President of Regulatory Affairs
In her 115-page decision, Judge Brinkema agreed with the DOJ that Google, by tying its ad server and ad exchange businesses together, was able to "establish and protect its monopoly power in these two markets." Publisher ad servers are a platform used by publishers to manage and control their inventory of ads. The ad exchange business is a digital marketplace that connects ad sellers like publishers with potential ad buyers like advertisers. It can be compared to an online stock exchange where ads and ad space are bought and sold instead of equities.
The DOJ has argued that the court should force Google to sell off its digital advertising products including Google Ad Manager which includes the ad exchange and the publisher ad server. On Wall Street, shares of Google parent Alphabet (GOOG-NASDAQ) slipped slightly on the news with the stock down 1.3% or $2.01 to $153.49. The 52-week high is $208.70 while $142.66 is the 52-week low.
Google's legal issues continue. Next week, a court in Washington will hold a trial with the DOJ attempting to force Google to sell its Chrome Browser and take other steps to reduce its dominance in the search engine market.
Some consumer watchdogs took to their social media platforms to declare victory over Google. Sacha Howarth, executive director of the Tech Oversight Project, said, "This ruling is an unequivocal win for the American people that will help lower prices, increase competition, and lead to a better internet for everyone."
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