Online search and ad giant Google says competition in the ad-tech space is fierce and increasing in contrast to the claim in the Department of Justice’s antitrust lawsuit filed this week that over the last 15 years the company has come to monopolize the way ads are bought and sold online.

“It’s been well reported that competition is increasing as more and more companies enter and invest in building their advertising businesses,” Dan Taylor, Google’s vice president of global ads, said Tuesday. 

Earlier that day, DOJ announced it was suing Google for violating Section 2 of the Sherman Antitrust Act by using acquisitions to buy its way into dominance of the ad-tech space, locking publishers into the system and limiting advertiser’s bidding options, and then manipulating auction mechanics to deprive rivals of scale.

“The Department alleges that Google engaged in 15 years of sustained conduct that had — and continues to have — the effect of driving out rivals, diminishing competition, inflating advertising costs, reducing website publisher revenues, stymieing innovation, and flattening our public marketplace of ideas,” said Assistant Attorney General Jonathan Kanter, the DOJ’s antitrust chief, pictured above with Attorney General Merrick Garland and Associate Attorney General Vanita Gupta.

Market dominance

Last year Google parent Alphabet earned some $260 billion in revenue, of which about $32 billion is from the Google ad-tech system that’s under scrutiny. For each dollar that goes through its system, the DOJ says, the company earns at least 30 cents even if another company’s exchange is used.

“Google’s own internal documents concede that Google would earn far less in a competitive market,” DOJ said in its complaint.

The company got to this point through a series of strategic acquisitions, including of DoubleClick in 2008 and AdMeld in 2011, and then making it hard for participants to use rivals, DOJ said. 

The federal government approved these acquisitions, Taylor said. “DOJ is demanding that we unwind two acquisitions that were reviewed by U.S. regulators,” he said. “In seeking to reverse these two acquisitions, DOJ is attempting to rewrite history.”  

How much the company dominates varies by the tracking mechanism, but a recent analysis by Axios shows it has just under 30% market share in online ad deals, down from about 35% in 2017, its peak. 

In its complaint, DOJ says the company at one time had a 90% share of the ad market that went through what the company calls its DFP ad server, which Google acquired from DoubleClick and then built out further.    

“Google’s durable monopoly over the publisher ad server market has allowed it to avoid innovation and competition by controlling the very rules by which the game is played,” the complaint said. “As a result, other publisher ad servers have left the market altogether, refocused on related markets, or faded into insignificance.”

Strong competition

From Google’s perspective, the claim that rivals have been pushed out isn’t accurate. Last year, for example, Microsoft acquired Xandr, an ad tech company that was spun off from ATT. “This acquisition enabled Microsoft to sign a landmark deal to build Netflix’s advertising business,” Taylor said. “The government did not challenge this acquisition.”

Meta, Amazon and Apple all have ad-tech systems, and other big companies, including Walmart, Target, Disney and Comcast have systems they’re investing in, according to Taylor. 

In addition, you have a number of specialized systems from companies like AppLovin, Criteo, Index Exchange, Pubmatic, Magnite, MediaMath, OpenX, The Trade Desk and Unity, among others, Taylor said.

“The Trade Desk was recently ranked one of the fastest growing companies,” he said.  “These may not be household names, but they power many of the ads you see every day.”

The DOJ lawsuit was filed in the U.S. District Court for the Eastern District of Virginia. Taylor said it makes claims similar to a 2020 case brought by the attorney general in Texas and a handful of other states in the U.S. District Court in the Southern District of New York. Some of the claims were dismissed but others are going forward. 

“DOJ is doubling down on a flawed argument,” Taylor said. “We’ve already responded in detail to many similar claims made in the complaint led by the Texas Attorney General.”

Joining DOJ in the lawsuit are the states of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia.