The Department of Justice (DOJ) filed an antitrust lawsuit against Google last week, accusing the tech giant of abusing its dominance in the digital advertising market and threatening to dismantle parts of its business.
The US government said it believes Google should sell its sell-side advertising assets, Ad Manager Suite, a line of business which accounts for around 12% of Google’s revenues and also plays an important role in the search engine company’s overall sales. This includes not only ads in the search environment, but also the technologies for embedding ads on company websites. Advertisers criticize, among other things, that Google acts with insufficient transparency.
The proceedings regarding the case are scheduled to open in September 2023.
Stronger Case Against Google This Time?
Digital policy consultant Kristina Podnar said while there is increased competition in the online ad marketplace — from rivals including Apple, Microsoft and social media companies including Facebook parent company Meta — Google essentially still dominates.
“It’s moving in the right direction, but can somebody else compete with [Google parent company] Alphabet? Not really,” she said. “I think that’s where the DOJ is coming from.”
Podnar added she thinks this is the first time the DOJ has a strong enough case that’s going to stick.
“It’s about how Google is cornering the marketplace and how its monopolistic behavior is spanning the entire industry,” she said. “I do think that the DOJ case has a lot of teeth this time around.”
Few Surprised by DoJ’s Action Against Google
Andrew Savitz, CMO of Azul, a Java platform, said it’s not surprising that the DOJ is going after Google.
“Google has been the dominant leader in the ad tech space in both the US and world for over a decade,” he said. “Just look at its platforms Google Search, Youtube, Google Ads, Google Analytics, DV360, SA360, to name a few.”
While some of the platforms, such as SA360, integrate with rival ad tech companies like Facebook and Microsoft Advertising, the platform is still predominantly focused on ease of integration with the Google ad-tech ecosystem and ad formats to drive ad revenue.
He explained there is a general feeling amongst businesses that you must appear on the first page of the search engine results (SERPs), either through organic or paid.
“For large companies who compete directly with Alphabet companies, it doesn’t always feel like an even playing field because it’s hard to tell if Alphabets’ own companies benefit over others based on how their digital content appears in the search engine results,” Savitz said.
He pointed out one challenge businesses have faced over the last decade is a decrease in organic traffic. The cause of this is twofold, Savitz said: First, as Google has updated its SERPs layout and design, the organic listings and nonpaid opportunities for business to appear have moved further down the page, causing a reduction in “free” organic traffic.
Second is the increase in no-click searches — users search on Google, and, in many instances, Google is pulling content directly from the third party sites and including it at the top of the SERP as an instant answer or part of the knowledge pane.
“Searchers receive an answer, but the websites providing the content do not receive the traffic — Google directly benefits from the businesses content and keeps searches within the Google ecosystem,” Savitz said.
He said a breakup of Google’s online advertising business would hopefully increase competition in AdTech, providing more venues for advertising and reducing costs.
“Today with just a handful of key advertising platforms that ‘everyone’ feels like they must advertise on to reach potential customers the costs steadily increase — making it harder to be profitable year after year,” he said.
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The Benefits of a Breakup of Google’s Online Advertising Hold
Ana Milevskaja, interim CMO at Productsup, added more diversity in digital advertising can be a good thing for businesses, as it creates more opportunity to reach more end users at more touchpoints.
“At the same time, businesses are already struggling to manage their ad campaigns across various channels and software as it is,” she said. “For as powerful of a marketing tool that digital advertising can be, it’s also a highly complex ecosystem.”
She pointed out any potential changes to Google’s business will shake up how marketers manage their product data, so they’ll need to have full visibility and control over their feeds to ensure no gaps in performance.
Brian Mandelbaum, CEO of Attain, said advertisers and marketers will benefit from this potential breakup because transparency will emerge where it’s currently been nonexistent.
“Google will no longer have complete control over the inventory, giving advertisers and marketers the right to choose,” he said. “More broadly, there will be a creative competition across all demand-side platforms that currently exist.”
He added digital advertisers and marketers would turn to more detailed and concise data sets by way of first-party data.
“They’ll also be able to make more transparent decisions as Google would no longer control the entire inventory,” he explained. “Publishers will be able to make more money since their source of demand will increase, which would yield a higher return for media companies that are competing against each other.”
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Will Google Still Dominate Online Advertising?
Fiona Campbell-Webster, chief privacy officer at MediaMath, pointed out Google will vigorously defend the claims and may even decide to divest itself of some of the business lines or separate out all these business lines into a different entity.
“If the DOJ does win the case, then if the outcome does not simply result in fines and the DOJ requires actual restrictive measures and divestment by Google of certain of its business lines, it could significantly open up opportunities for small and medium size businesses in AdTech,” she said. “This could further result in revenue benefits for publishers and more choice on revenue pathways for advertisers.”
Savitz said breaking up Google would directly impact online advertising because it would reduce the amount of data available and shared across its ecosystem (Chrome Browser, DSP, Google, Youtube, etc.) — reducing the efficiencies many advertisers have gained in performance from audience targeting and bid automation.
“Our business has directly benefited from adopting smart bid strategies that use AI models and data from across the Google ecosystem to make our advertising more efficient,” Savitz added.
Campbell-Webster said even if there is a breakup of Google-owned and -operated properties that play in the AdTech space, the question remains open as to whether Google will still have dominance over the impact of its proposed third-party cookie deprecation by having the ability to decrease the scale and reach of the open web.
“If they do what they have promised, it will mean that data for targeting purposes will be concentrated with companies that have a large number of logged-in users, and buyers will have to buy directly from those companies to get access to users with enriched data — all to Google’s advantage,” she explained.