Google, Online advertising market antitrust ruling...Possibility of business split increases

Google Facing Core Business Partition Crisis (Source: AFP)

The U.S. Federal Court has ruled that Google has engaged in illegal monopoly practices in the online advertising technology market. This is the second antitrust violation ruling following last August's online search market monopoly, and Google faces the possibility of having to break up its core business.

On April 17 (local time), Judge Leonie Brinkema of the United States District Court for the Eastern District of Virginia ruled that Google's actions to suppress competition and maintain dominance in the ad server and ad exchange sectors of the advertising technology market violated antitrust laws. The judge pointed out, "For over ten years, it has strengthened its monopolistic position by integrating the two markets through contracts and technology, and in the process, coerced anti-competitive conditions on customers and restricted functions, harming both competitors and consumers."

The 'ad server' at the center of the issue is a system that places and broadcasts ads on websites, and the 'ad exchange' is a platform for buying and selling ads in real-time. The court judged that Google exerted influence in these two markets centered on the AI Ad Manager platform.

On the other hand, it was judged that the U.S. Department of Justice's claims regarding the advertising network sector, which mediates between advertisers and ad publishers, were dismissed as it was not proven unlawful.

This ruling is the result of a lawsuit filed by the U.S. Department of Justice in January 2023, and it came after about a month of trial. Google earned approximately $31 billion in revenue through its advertising platform in 2023 alone, which accounts for about 10% of its parent company Alphabet's total sales. Currently, about 90% of online publishers use Google's advertising system, and Google charges 20-30% of the advertising costs as commission in this process.

If this ruling is confirmed, restructuring measures for market recovery are expected to be discussed in a separate trial. The industry sees that Google might be required to sell some of its advertising-related technology businesses or undergo strong measures such as splitting the Google Network division.

In response, Google immediately announced its intention to appeal. Leann Mulholland, Google Vice President, rebutted, "We cannot agree with this ruling regarding publisher tools," and "Users choose Google's tools among various options because of efficiency and cost-effectiveness."

Currently, Google is also in a disadvantageous position in a separate antitrust lawsuit regarding the online search market. In the trial set to begin on the 21st, whether to sell the Chrome browser is expected to emerge as a key issue. The U.S. Department of Justice claims that Google has maintained its dominance in the search market by integrating Chrome and search advertising businesses and is demanding they be separated.