The Department of Justice filed a lawsuit against Google’s parent company Alphabet last Tuesday, alleging the tech giant abused its dominance in the digital advertising sector and violated federal antitrust law.
This is the second federal antitrust lawsuit the Justice Department has filed against Google since 2020. In the last two years, Google’s parent company ramped up annual lobbying expenditures by nearly 50% — spending more than $13 million on federal lobbying in 2022 alone.
Tuesday’s complaint alleges Google monopolizes digital advertising technology tools — informally known as “ad tech” — that act as matchmakers between billions of advertisers and website publishers each day through automated auctions. According to the court filing, Google maintains its dominance in the digital advertising space by systematically acquiring rivals, forcing publishers and advertisers to adopt its tools and manipulating the auction process to thwart competition.
“Competition in the ad tech space is broken,” the lawsuit alleges, since Google now controls nearly all the major technological tools involved in the advertisement bidding process.
This behavior, which has led the Justice Department to dub Google an “illegal monopoly,” has allegedly forced key and potential competitors to abandon the ad tech industry by artificially inflating entry barriers to the market. Google rakes in 35 cents of each advertising dollar that goes through its ad tech tools.
Joined by eight plaintiff states, the Justice Department is seeking “equitable relief on behalf of the American public” as well as triple the amount of damages to make up for what federal government agencies lost due to overpaying for online advertising.
Google was the top earner of digital advertising revenue in 2022, generating over $168 billion. The majority of that revenue came from search ads, which was also addressed in a previous lawsuit the department brought against Google in 2020.
During former President Donald Trump’s administration, the Justice Department and 11 states sued Google, alleging the company “unlawfully maintained monopolies in search and search advertising.”
The 2020 suit focused on Google’s practice of making deals that give “preferential treatment for its search engine on devices, web browsers, and other search access points, creating a continuous and self-reinforcing cycle of monopolization.” This preferential treatment allegedly includes pre-installation of Google products and making them the devices’ default search engine or undeletable. That case will go to trial later this year.
Late last year, the European Union upheld an antitrust ruling of its own, fining the company more than $4 billion for requiring phone manufacturers to pre-install Google Search and Chrome to obtain a license to its app store, Google Play. This marked the third time the EU has levied antitrust fines against the company.
Since the Justice Department’s 2020 antitrust lawsuit against Google, Alphabet has been spending more on lobbying each year. That year, it spent about $9 million. In 2021, Alphabet ramped up its lobbying by 34%, spending nearly $12 million.
Last year, the company spent over $13 million, the most Alphabet spent since 2018, when Alphabet spent a record $22 million on lobbying. Alphabet, alongside fellow tech giants Meta, parent company of Facebook, and Amazon.com, upped its lobbying efforts that year to contest scrutiny from lawmakers, who were considering new antitrust and privacy regulations.
In 2018, Alphabet’s lobbyists focused on legislation in the House and Senate that would have provided a federal framework for self-driving cars. Waymo, a subsidiary of Alphabet, began testing driverless cars on public roads that same year.
Google did not respond to a request for comment.
Subhed: Alphabet lobbyists take on antitrust bills in Washington
Antitrust bills have been a key focus of Alphabet’s lobbying campaign as the company ramped up its operations in D.C.
One issue that Alphabet lobbyists focused on was the Open App Markets Act; introduced in the U.S. Senate with a companion bill in the House, the bill would have prohibited companies like Google and Apple from forcing app developers to use their app store or payment system for purchases. Google publicly denounced the bill last year.
“This bill could destroy many consumer benefits that current payment systems provide,” Google Vice President of Government Affairs and Public Policy Mark Isakowitz told Reuters when the Senate Judiciary Committee voted 20-2 to advance the bill out of committee in February 2022. The act and its companion bill in the House were mentioned in 10 of Alphabet’s lobbying reports in 2022.
The bill failed to reach the Senate floor before the conclusion of the 117th U.S. Congress following a lobbying blitz by Alphabet and other tech giants including Apple, Amazon and Meta. The bill is yet to be reintroduced in the 118th Congress.
Alphabet’s lobbyists tackled three other failed pieces of antitrust legislation last year.
The American Innovation and Choice Online Act, which aimed to prevent Big Tech companies from prioritizing their own products over their rivals, was advanced by a Senate committee last January, but did not come to the floor for a vote before the end of the term. The Competition and Antitrust Law Enforcement Reform Act of 2021 shared the same fate.
The State Antitrust Enforcement Venue Act of 2021 unanimously passed in the Senate, but wasn’t voted on in the House before Congress adjourned.
Alphabet affiliates also spend millions of dollars each election in campaign contributions, largely to Democratic candidates. During the 2020 election cycle, PACs and individuals from Alphabet donated over $28 million in political contributions, with President Joe Biden’s campaign, the Democratic National Committee and Democratic super PAC Senate Majority PAC, making up the top three recipients. About half as much was spent in the 2022 midterm election, with the DNC and Senate Majority PAC topping the list again.
Despite spending big on political influence, Alphabet announced on Jan. 20 that the company would be laying off 12,000 employees — about 6% of its workforce — making it one of many tech companies that recently announced mass job cuts. In his memo to staff, CEO Sundar Pichai said the cuts were company-wide and reflect the outcome of a “rigorous review” of the company’s staff and priorities.