Google’s profit-puppy ad biz is under threat as regulators crank up the heat on tech giants
Google’s bread-and-butter ad biz… could be toast. This week the Department of Justice filed an antitrust suit targeting Google’s golden goose: advertising. The goal is to break up its digital ad biz, which makes up 80% of the search leader’s sales. The suit alleges that Google abuses its role as one of the largest buyers, sellers, and brokers of digital ads and hurts competition.
- Big yikes… for Google. The suit calls for the divestiture of Google’s ad exchange and the unwinding of “anticompetitive” ad-quisitions like DoubleClick.
- Google says the suit “attempts to pick winners and losers in the highly competitive advertising technology sector,” arguing it would raise ad fees and hamper growth.
- Searching for a friend… Eight states, including California and New York, joined the DOJ’s suit. The court battle could have serious consequences for the ad industry.
Google can buy itself flowers… but it’ll need to buy lots of lawyers, too, to deal with regulatory break-up tensions. This suit isn’t the only legal drama Google’s dealing with: in 2020 the DOJ filed a suit targeting its search dominance (think: how it’s the default in Safari). That case is expected to go to trial in September. Google’s facing three additional antitrust suits from state AGs. Oh, and in September the EU fined Google $4B after ruling it had broken competition rules — the EU’s second win in a trio of cases.
Tech’s biggest threat isn’t deceleration… it’s regulation. Growth slowdowns have been dominating headlines. But while macro trends can be temporary, regulatory crackdowns change a biz forever. Scrutiny has intensified in recent years: the FTC’s suing to block Microsoft’s $75B Activision acquisition, and it slapped Meta with two antitrust suits. The DOJ’s investigating Apple, while the EU has opened cases against Meta, Google, and others. Meanwhile, President Biden has urged lawmakers to rein in tech titans with legislation.