ALEXANDRIA, Va. (CN) — Even after a second antitrust trial, the justice system isn’t done with Google. In a matter of weeks, a federal judge could decide whether to carve up the firm’s advertising business, ending its domination in the advertising market.
That possible outcome could upend a business that reportedly took in more than $300 billion in 2023 and employs more than 180,000 people. But to stay as big as it is, Google needs advertising.
“A lot of the core businesses that Google provides, particularly search, are not making money on their own,” Sruthi Thatchenkery, assistant professor of strategy at Vanderbilt University’s Owen Graduate School of Management, said. “Internet browsers are not viable as independent businesses.”
No one wants a world without a free search engine. But it’s also true that news organizations provide the content — unpaid — that Google displays. And no one likes working for free.
“The foundation of Google’s monopoly is access to information,” said Danielle Coffey, president and CEO of the News/Media Alliance, a group representing 2,200 publishers in the U.S. “The fuel to that engine is the content. Google has unfettered access to all the content with monopoly terms.”
The U.S. Department of Justice’s court cases against the tech giant could fix the long-term broken structure in the ad market, Coffey said.
An accident of history
Google has weathered two separate antitrust trials. The first ended when a federal judge in August declared that the tech giant operated its search engine business as a monopoly. In October, Justice Department attorneys suggested a federal judge could remedy the monopoly by ordering Google to divest key parts of its business, such as the Google Chrome browser and the Android operating system.
The second, unsettled case focuses on Google’s advertising arm, which the Justice Department contends is also a monopoly. Attorneys for both the Justice Department and Google spent most of September grilling witnesses in the courtroom of U.S. District Judge Leonie Brinkema. After final arguments Thanksgiving week, Brinkema will decide whether Google’s advertising business violates antitrust laws.
Monopoly power is not unlawful unless it is accompanied by an element of anticompetitive conduct, according to the Justice Department’s website. A business must have maintained monopoly power “as distinguished from growth or development as a consequence of a superior product, business acumen or historic accident.”
In a way, that historical-accident caveat describes Google — a game-changing company known for launching and developing Internet services in a way the world didn’t know it needed. But when Justice Department attorneys sum up their case, they must argue that company executives acted in a way that was anticompetitive, taking over high-tech tools used by publishers, advertisers and brokers in digital adverting.
During the trial, government attorneys peppered Google witnesses with questions about the 2007-2008 purchase of DoubleClick, a company with an ad server considered more advanced than Google’s own. Google also acquired ad exchange AdX through which digital advertising space could be auctioned.
“Google’s restrictions have rendered its publisher ad server the only viable means to obtain meaningful access to the unique, sizeable Google Ads’ advertising demand available almost exclusively on Google’s ad exchange,” prosecutors said in their lawsuit.
For its part, Google has accused the government of portraying a one-sided and incomplete view of a complex marketplace. Far from dictating the advertising business, Google argues that others in the advertising ecosystem compete with Google, including major media companies such as Meta. And as Google executives see it, they help publishers monetize their business.
The tech giant has also contended that the Justice Department failed to show plausible harm to the competition or consumers. Advertisers and publishers, it says, choose Google’s ad tech products because of the quality.
“Frenemy”
For news publishers, some of whom testified during the trial, quality isn’t necessarily why Google is used. Indeed, a 2020 white paper by the News/Media Alliance described Google as a “frenemy.”
News/Media Alliance charged in their report that Google has “so much power as the dominant online platform, with the ability to play one news publisher off the other, that it has been able to effectively secure acquiescence from the publishers for its activities without paying a license fee for their content, despite their significant costs in reporting the news.”
It’s death by a thousand cuts, Coffey observed, “And they have the machine to sustain the thousand cuts.”
The antitrust cases punctuate a period of existential struggle for news organizations.
Since 2004, about 1,800 newspapers have closed in the United States, according to the Poynter Institute for Media Studies. At the same time, multiple organizations have sprouted online and all battle for advertising alongside news organizations. Digital ads accounted for 48% of newspaper advertising revenue in 2022, an increase from 17% in 2011, according to the Pew Research Center.
A proposed law, the Journalism Competition and Preservation Act, would allow some news providers to collectively negotiate with online platforms regarding use of content. And news organizations are resilient.
“We have been in the advertising business since the invention of advertising,” said Coffey. “We’ve been in the business of being able to control our inventory and make it accessible to advertisers. We’re very much prepared to be able to have a more open, transparent level playing field.”
The news industry has survived other challenges. The advent of television news in the mid-20th century was a setback for newspapers.
“If you have an industry where what you’re producing is what people want, you’ll have ups and downs,” Coffey said. “You’ll take a hit, you’ll get back up.”
Media outlets will try to get back up again, no matter what happens to Google. But right now, they may get back up on unstable ground and in a broken marketplace.