The DOJ claims in a recent lawsuit that Google’s 2007 acquisition of internet advertising giant DoubleClick was the beginning of the company’s alleged ad monopoly. DoubleClick was the beginning of a major spending spree for the Masters of the Universe which further strengthened its grip on the ads marketplace.
Bloomberg reported that the government has argued in a lawsuit that Google must be dismantled because it has illegally monopolized the market for advertising technology. The US Department of Justice and eight states filed the lawsuit, which claims that Google’s 2007 purchase of ad-tech startup DoubleClick was the “first step in Google’s march to monopoly”The company holds the monopoly in the global $626.9 million digital advertising market.
The complaint claims that Google faced difficulties in launching an ad-serving server which would have enabled it to advertise on other sites. It also had difficulty cultivating partnerships with large advertisers prior to the DoubleClick deal. DoubleClick solved these issues for Google, which is the most powerful ad-server with links to top publishers and large advertisers. Google bought additional companies that made tools for publishers and marketers, and was involved in the entire process of purchasing online advertising.
According to the government, Google raises its pricing for advertisers and retains a larger percentage of publishers’ revenue as a way to promote its products. The complaint claims that the company retains at least 30 cents of every dollar advertisers spend using Google’s digital advertising tools. Critics contend that Google’s market dominance actually hurts consumers because they must pay inflated prices to cover the expenses brands incur for their advertising.
Google claims that it faces a lot of competition and that the Justice Department’s case mirrors one that a group of state attorneys general, led by Texas, brought against Google. Google also stated that at the time of the DoubleClick deal, the federal government approved it. Nevertheless, detractors contend that Google’s expansive digital ad business makes the market inefficient in ways that have an impact on the cost of goods and services and that compelling the company to divest could resolve conflicts of interest that arise when a company sells ads and runs an ad marketplace.
According to Eric Franchi, a general partner at AperiamVentures, a venture firm that invests in ad-tech and marketing startups, the divestiture of portions of Google’s ad business would open up significant opportunities for new entrants. According to Fiona Campbell-Webster, chief privacy officer for advertising platform MediaMath, spinning off some of Google’s ad-tech products could improve publisher margins and increase advertisers’ reach.
Breitbart news reporter Lucas Nolan reports on issues such as free speech and onlinecensorship. Follow him on Twitter @LucasNolan
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