A lawsuit initiated by the Texas Attorney General – later joined by multiple States Attorneys General – pursues this approach further. The lawsuit accuses Google of dominating the online advertising ecosystem with actions such as colluding with its competitor, Facebook. It also alleges that Google sabotages “header bidding,” a practice that allows advertisers to route a single request through multiple ad exchanges at once.
With Google operating every aspect of the ecosystem through the services outlined above, ensuring companies of all sizes must use Google to market their goods and services, the lawsuit argues that “Google is pitcher, batter, and umpire, all at the same time,” and “monopoly financial broker” and “monopoly stock exchange” simultaneously. Google extracts fees from all firms who want to participate in the ecosystem – from publishers and websites on the supply side that want to market their inventory on GAM and GPN, the advertisers and buyers on the demand side that want to purchase ad space, and from everyone transacting on Google’s AdX.
When publishers conceived and implemented “header bidding” to bypass Google’s rules and allow ad inventory to be available on multiple ad exchanges, Google invented a strategy that would sabotage this mechanism. The lawsuit alleges that Google ensured that its own exchange win the bidding every time, regardless of higher bid prices – even creating a codename for this strategy after a character from Star Wars (though the name is redacted from the public lawsuit document). When Facebook began to adopt the “header bidding” concept to undermine Google’s antagonistic position, Google began negotiations with Facebook to manipulate advertising auctions to ensure Facebook would win more often.
With the Internet being founded upon core principles of decentralization and neutrality, Google’s monopoly position in the online advertising ecosystem threatens the entire digital economy. With this lawsuit, Attorneys general seek injunctive relief to prohibit Google from conducting anti-competitive behaviour. However, most important, in para. 356(f), the lawsuit asks for “structural relief.” Though this is not explained or elaborated on further, this request would likely see that Google “break up” each of its services and divide them into separate companies that would not be able to collude with each other. It could ensure that Google’s search function, with free use for consumers, would be separated from Google’s advertising business, fundamentally changing the company’s business model. It might make it difficult – or even impossible – for Google to share its demographic and behavioural data from users’ searches with advertisers and publishers. Without the advertising business, Google could lose its primary revenue stream, which might also affect how users interact with Google’s search function, and other products like Gmail or Docs.
The Texas lawsuit highlights how large online platforms, like Google and Facebook, can command a monopoly on digital markets – especially the advertising market. And with the advertising business being the primary revenue stream for these companies and being the basis of their business model, anti-trust legislation, regulation, and legal actions could fundamentally transform the entire digital economy.
But the question is: does current anti-trust legislation adequately address PA? The recently proposed legislation falls short of explicitly targeting the issue, while it remains to be seen if lawsuits, the DOJ’s investigation, or the FTC’s powers can effectively change anything.