The United States Department of Justice is cracking down on companies violating anti-trust laws. In particular, Google is under fire for allegedly operating a monopoly in the digital advertising industry.
Google is now in a Virginia court defending its digital advertising business against monopolizing allegations, a process that is estimated to take four to six weeks.
The potentially groundbreaking trial began on September 9, 2024, and could mark the beginning of the end for Google’s ad tech business as we know it today. If found guilty, Google would be forced to break up its business and divest its ad server and ad exchange. This would
make room for competitors to get their own foothold in the digital ad business.
After this ordeal concludes, Gannett, the owner of over 200 local news outlets and USA Today will be able to proceed with its own suit against the search giant – also pertaining to Google’s alleged monopolizing of the digital ad market. The pending federal lawsuit was filed in New York in 2023.
With Google facing the fire, how do other digital giants avoid the DOJ’s ire? To understand what is happening in the ad world right now, we first need to understand what anti-trust laws are and how they operate.
What are anti-trust laws?
Anti-trust laws are designed to protect the economy and the population from monopolies. In this case, monopoly doesn’t refer to a fun family board game, but an economic situation where one company owns an entire sector with no regulatory oversight. This shuts out all competition and makes breaking into that market almost impossible. Competition is an essential part of a capitalist economy, and blocking monopolies is in the best interest of the economy and consumers.
The US first passed antitrust legislation in 1890. The Sherman Antitrust Act specifically targeted the Standard Oil Trust, a corporate trust founded by John D. Rockefeller in 1870. Standard Oil was ordered to divest in 1911 by the state of New Jersey as a direct result of the Sherman Antitrust Act.
This first section of the act prohibits private companies from preventing trade between states or foreign countries. The second section prohibits any attempt to monopolize any trade or commerce in the US. Companies found to be violating the Sherman Act can be ordered to dissolve their organizations and may also face fines and/or imprisonment. Other organizations can also sue for damages if they can prove their business was injured by the violations.
In addition to the Sherman Act, the US formed the Federal Trade Commission in 1914 to help regulate unfair trade practices and methods of competition. The US government also enacted The Clayton Act in 1914. This act bans any mergers or company acquisitions that would create a monopoly.
In 2024, antitrust cases are typically prosecuted by the US Department of Justice’s Antitrust Division. On occasion, the Federal Trade Commission will also try their own cases. These pieces of legislation, though over a century old, are still strictly enforced and central to the preservation of competition in the US.
Legal precedent
The wins and losses of antitrust trials set precedents that define how cases are decided going forward. A couple of famous examples of anti-trust cases from modern memory include:
United States v. Microsoft:
In 2001, Microsoft was accused of monopolizing the web browser market. It was alleged that by forcing computer manufacturers to automatically install Internet Explorer on Windows operating systems, that Microsoft was participating in unfair competition practices. The court initially ordered that Microsoft break up into two separate companies, although upon appeal the company received a small penalty.
United States v. Google:
In 2023 Google was charged with violating section two of the Sherman Act and was found guilty. The company was found to have an illegal monopoly over the search market and in September 2024 hearings began to discuss solutions. Parts of Google may be forced to break off into smaller companies.
Anti-trust trials are a huge deal. The organizations involved are almost always well known to the public and the outcome of these trials changes the business landscape for entire industries. There is always big money on the line and smaller companies are often collateral damage.
As to how this latest anti-trust case will play out for Google, only time will tell. Regardless of the penalties faced by the search giant, the world of search advertising is about to be upended.
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