STORY: Google fired back at the U.S. Justice Department, saying the government's complaint accusing the tech giant of abusing its dominance in digital advertising is (quote) "without merit."
Google on Wednesday said it will "defend itself vigorously" against the antitrust lawsuit, filed a day earlier by the DOJ and eight states.
The lawsuit seeks to break up the company’s online ad business by forcing Google to sell its ad manager suite.
Matt Stoller, Research Director at the American Economic Liberties Project, breaks down the government’s position.
“The basis of the case is that Google is controlling the buy-side, the sell-side – so that would be the buyers of advertising, the sellers of advertising, that would publishers, newspapers - and then the matching engine. And that that would be a series of conflicts of interest and that Google has been manipulating these advertising markets, charging too much and excluding competitors.”
Advertisers and website publishers have complained that Google, which is owned by Alphabet, has not been transparent about where ad dollars go, specifically how much goes to publishers and how much to Google.
“So Google effectively can say – they can set the price, no one can audit them. And what you should have, is when you put a dollar of advertising into an advertising system, maybe 5 to 10 % of that should go to the middle men [FLASH]. What the DOJ says, and these eight states say, is that about 35% of that money is going to Google, and that’s a really, really high amount, that’s a high percentage of take."
Google, which depends on its advertising business for about 80% of its revenue, said the government was "doubling down on a flawed argument that would slow innovation, raise advertising fees and make it harder for thousands of small businesses and publishers to grow."
The Justice Department asked for a jury to decide the case, which was filed in Virginia.