The Justice Department is pursuing its case against Google’s dominance in the ad market, citing two key factors. Firstly, Google exerts excessive control over search engine ads. Secondly, it acts as an agent for a significant portion of the interest’s advertising, a broker’s role known as “ad tech.” Google’s ownership of this part of online marketing is so comprehensive that it has no real competition, effectively placing it in a class of its own.
The easiest and most direct way to solve the Justice Department’s complaint would be for Google to establish a new ad tech company that has a distinct ownership structure, management team, and no affiliation with the search engine division. However, Google argues that this measure is unnecessary. According to The Wall Street Journal, Dan Taylor, Alphabet’s vice president of global advertising, said, “As we’ve said, this lawsuit ignores the reality of today’s dynamic digital-advertising space, where we compete against hundreds of companies like Amazon, Apple, Meta, Microsoft and TikTok.” (These are America’s most hated companies.)
Taylor has a point, but is it strong enough? Google has about 28% of the online ad market in the U.S. Facebook has 20%. In each case, the number is falling. As Amazon’s most recent earnings show, its ad business is booming. Amazon is expected to have 13% of the market next year. Meta’s share is forecast to drop to 18%.
However, there is a distinction between market share in search and ad tech. The Justice Department is wary of combining two dominant services and may struggle to prove that the connection between the two provides Google with a significant edge. The Justice Department’s argument will likely include the fact that Meta and Amazon lack robust ad tech businesses, making their cases distinct from Google’s.
The Justice Department’s charge is true. Google holds two pole positions. That is easy to solve with a breakup. However, it dodges the question of whether the prowess of the two businesses in Google’s hands is enough for a breakup to matter. (These are the industries laying off the most workers.)
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