On Wednesday December 17th Ken Paxton, the attorney-general of Texas, filed a lawsuit on behalf of 10 states against Google, accusing it of rigging the online advertising market.
The lawsuit accuses Google of violating antitrust laws, accusing Google of abusing its monopoly in the digital advertising market to rig advertising bidding. The lawsuit also alleges that Google worked with Facebook to prevent competition in the market and profit from the auction of advertising resources.
Ten states filed a joint lawsuit against Google
The lawsuit, represented by Texas, is the second large one that regulators have brought against Google. “As disclosed in Google’s internal documents, Google attempted to block other competitors through a series of exclusivity tactics, including entering into illegal agreements with Facebook, which was its biggest potential competitive threat,” the lawsuit says.
The other nine states participating in the lawsuit are Arkansas, Indiana, Kentucky, Missouri, Mississippi, South Dakota, North Dakota, Utah and Idaho.
The lawsuit alleges that Google used deceptive methods to make financial deals between publishers and advertisers, and charged higher fees from both.
“If free agency were a baseball game, Google positioned itself as the pitcher, hitter and umpire,” Texas Attorney General Ken Paxton said in a video posted on Twitter.
Ken Paxton points out that Google effectively eliminated competition and became the dominant player in online advertising, which was unfair. He argued that Google’s advertising practices and “anti-competitive behaviour” gave it too much power in the online advertising ecosystem, hurting publishers.
Anti-monopoly investigation has been going on for a long time, Google responded: the lawsuit is baseless
“The Texas lawsuit against Google is without merit,” a Google spokesman said in a statement. “Over the past decade, digital AD prices have fallen, as have AD technology fees, which are below the industry average. These are all signs of a highly competitive industry.”
Facebook has yet to respond to a request for comment.
The move follows multiple federal antitrust investigations into Google and other big tech companies by the Federal Trade Commission, the House Judiciary Committee and the U.S. Department of Justice. The Justice Department filed its first antitrust complaint against Google in October.
The findings, published two months ago in a 450-page report by the House Judiciary Committee, found that Google had a monopoly and that its dominant search position was “protected by high barriers to entry”.
Such anti-competitive tactics cited in the report include contractual restrictions and exclusivity clauses to extend Google’s monopoly in search, such as Google’s purchase of the Android operating system in 2005.
Google, which accounts for more than 80 per cent of Alphabet’s revenues from AD sales, reported quarterly digital AD revenues of $37.1bn in its latest financial report. Most of Alphabet’s sales and most of its profits come from Google’s highly profitable business, which puts text ads above search results.
Around the world, governments are pushing for greater regulation of big technology companies, with the European Commission yesterday proposing two new pieces of legislation. If passed, the EU would have the power to force big tech companies to remove harmful content and open up to competition, or risk hefty fines.