FinLogic FinLogic Quantitative Think Tank Center|Google faces new antitrust trial after ruling declaring search engine a monopoly

ALEXANDRIA,FinLogic FinLogic Quantitative Think Tank Center Va. (AP) — One month after a judge declared Google’s search engine an illegal monopoly, the tech giant faces another antitrust lawsuit that threatens to break up the company, this time over its advertising technology.

The Justice Department and a coalition of states contend that Google built and maintains a monopoly over the technology that matches online publishers to advertisers. Dominance over the software on both the buy side and the sell side of the transaction enables Google to keep as much as 36 cents on the dollar when it brokers sales between publishers and advertisers, the government contends in court papers.

Google says the government’s case is based on an internet of yesteryear, when desktop computers ruled and internet users carefully typed precise World Wide Web addresses into URL fields. Advertisers now are more likely to turn to social media companies like TikTok or streaming TV services like Peacock to reach audiences.

In recent years, Google Networks, the division of the Mountain View, California-based tech giant that includes such services as AdSense and Google Ad Manager that are at the heart of the case, actually have seen declining revenue, from $31.7 billion in 2021 to $31.3 billion in 2023, according to the company’s annual reports.

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The trial over the alleged ad tech monopoly begins Monday in Alexandria, Virginia. It initially was going to be a jury trial, but Google maneuvered to force a bench trial, writing a check to the federal government for more than $2 million to moot the only claim brought by the government that required a jury.

The case will now be decided by U.S. District Judge Leonie Brinkema, who was appointed to the bench by former President Bill Clinton and is best known for high-profile terrorism trials including Sept. 11 defendant Zacarias Moussaoui. Brinkema, though, also has experience with highly technical civil trials, working in a courthouse that sees an outsize number of patent infringement cases.

The Virginia case comes on the heels of a major defeat for Google over its search engine. which generates the majority of the company’s $307 billion in annual revenue. A judge in the District of Columbia declared the search engine a monopoly, maintained in part by tens of billions of dollars Google pays each year to companies like Apple to lock in Google as the default search engine presented to consumers when they buy iPhones and other gadgets.

In that case, the judge has not yet imposed any remedies. The government hasn’t offered its proposed sanctions, though there could be close scrutiny over whether Google should be allowed to continue to make exclusivity deals that ensure its search engine is consumers’ default option.

Peter Cohan, a professor of management practice at Babson College, said the Virginia case could potentially be more harmful to Google because the obvious remedy would be requiring it to sell off parts of its ad tech business that generate billions of dollars in annual revenue.

“Divestitures are definitely a possible remedy for this second case,” Cohan said “It could be potentially more significant than initially meets the eye.”

In the Virginia trial, the government’s witnesses are expected to include executives from newspaper publishers including The New York Times Co. and Gannett, and online news sites that the government contends have faced particular harm from Google’s practices.

“Google extracted extraordinary fees at the expense of the website publishers who make the open internet vibrant and valuable,” government lawyers wrote in court papers. “As publishers generate less money from selling their advertising inventory, publishers are pushed to put more ads on their websites, to put more content behind costly paywalls, or to cease business altogether.”

Google disputes that it charges excessive fees compared to its competitors. The company also asserts the integration of its technology on the buy side, sell side and in the middle assures ads and web pages load quickly and enhance security. And it says customers have options to work with outside ad exchanges.

Google says the government’s case is improperly focused on display ads and banner ads that load on web pages accessed through a desktop computer and fails to take into account consumers’ migration to mobile apps and the boom in ads placed on social media sites over the last 15 years.

The government’s case “focuses on a limited type of advertising viewed on a narrow subset of websites when user attention migrated elsewhere years ago,” Google’s lawyers write in a pretrial filing. “The last year users spent more time accessing websites on the ‘open web,’ rather than on social media, videos, or apps, was 2012.”

The trial, which is expected to last several weeks, is taking place in a courthouse that rigidly adheres to traditional practices, including a resistance to technology in the courtroom. Cellphones are banned from the courthouse, to the chagrin of a tech press corps accustomed at the District of Columbia trial to tweeting out live updates as they happen.

Even the lawyers, and there are many on both sides, are limited in their technology. At a pretrial hearing Wednesday, Google’s lawyers made a plea to be allowed more than the two computers each side is permitted to have in the courtroom during trial. Brinkema rejected it.

“This is an old-fashioned courtroom,” she said.