Google is in the midst of its third major antitrust lawsuit within a year, and it’s fighting tooth and nail to make sure that it doesn’t lose this one. Right now, it’s 0 for 2 in its lawsuits, having lost the two previous cases. With this next case fully underway, the focus has turned to publishers, and how they could be affected by it. The thing is that, if Google loses this case, it could be a massive win for publishers.
What’s going on?
We all know that Google is a big company. It’s one of the largest tech companies in the world being valued at more than $1 trillion. The thing about Google is that it’s not only the biggest fish in one pond. Think of it as a school of sharks in a swimming pool. The company has the Search engine market cornered along with the Android app market. Another market it dominates is the ad market. It’s the largest ad company in the world. If you see an ad on the internet, you can bet it was provided by Google.
As such, it’s been able to pretty much treat the market however it wants, and that doesn’t bode well for publishers. Over the years, the publishers who’ve relied on Google have been getting diminishing revenue for showing ads. However, Google’s income from ads has been increasing over the years.
Google has been able to throw its weight around in the ad market, make rules, and screw over countless companies, and who can stop it? No one! The competition, in most cases, pales in comparison to Google’s reach and influence.
So, with all those ingredients combined, we have ourselves a freshly-baked antitrust lawsuit. Not too long after being considered a search monopoly, the company is now facing another lawsuit. The U.S. DOJ (Department of Justice), accompanied by the attorneys general from states including California, New York, Virginia, and Connecticut, began opening statements on Monday. This phase of the case could last up to four weeks.
This case will decide if Google is also an illegal monopoly in the ad market. If so, then it could mean some major implications for the company as a whole and the companies that rely on its services.
Google doesn’t dominate the ad market, it IS the ad market
So far, the case is just getting underway, but both sides have already said their piece. In her opening statement, Justice Department Attorney Julia Tarver Wood mentioned some of Google’s unethical practices.
She said that Google has been the driving force in the online ad business and that it has been buying out the competition in order to keep its lead. For example, the company bought the advertising firm DoubleClick among others. This kind of practice allows Google to basically manipulate the market because it owns many of the companies within the market.
Not only that, but she brought another strong point. Google has its hands in all parts of the ad-selling process. As put by the Washington Post, in buying out so much of the competition, Google was able to basically be the primary place for people to both buy and sell ads. Not only that, but the company also acts as the middleman between the buyer and seller. This way, Google has control over the entire ad buying and selling process.
“One monopoly is bad enough. But a trifecta of monopolies is what we have here,” Tarver said in her statement. Since Google is such a large part of the ad business, this means that it can basically write the rules on online advertising.
People and companies are pretty much forced to use Google’s ads because its reach is so massive. Many of the advertising companies on the market are either owned by or rely on Google in some way.
What about the competition?
What competition?! During the trial, Google’s competitors were brought up. Along with Google, other companies like Amazon, Meta, and Microsoft have their own advertising businesses. However, just like with search, much of the competition just can’t hold a candle to Google.
An eMarketer report states that Google is the top ad provider in the U.S. market. It owns 25.6% of the market. That’s just a few steps ahead of Meta, which owns 21.3%, but it’s nearly double Microsoft’s share which is 13.9%. So, in the states, the numbers aren’t extremely drastic, but the story is different for other regions. In other parts of the world, Google displays 90% of the ads that you see. So, Google is the only viable option for several people.
The effect on publishers
Google’s practices have an effect on many industries around the world, and a large one is journalism. Countless sites around the internet depend on the ad revenue from Google. Over the years, the amount of money that publishers make in ad revenue has been going down despite the fact that the ad market has been earning more money year over year.
Google’s effect on publishers was one key focus of the case so far. Again, this is going to be a long and far-reaching case, so we’re going to hear more about this as time goes on. We’ve been seeing Google boosting the prices of ads in the past, and the company has been doing so silently. It’s been doing this while, allegedly, providing lower payouts to publishers.
As such, several companies have had to make some hard decisions. These include laying off employees and even shutting down entire papers. This is something that companies like Gannet have been vocal about. Gannet is a massive news organization, being the owner of numerous outlets including USA Today.
In 2023, Gannet sued Google because of the diminished ad revenue payouts. The company had to, sadly, shut down more than 170 publications since 2019. This means that hundreds, if not thousands, of jobs had been lost. That’s only one company; we can only imagine how many other companies had to shut down because of Google’s practices.
But, the publishers can’t do anything about it
Again, publishers don’t have many other places to go. So, existing publishers are forced to stick with Google’s shady practices. One thing that Gannet’s senior vice president of revenue operations, Tony Wolfe, said rings true. He was the first witness called to the stand on Monday. He said that switching ad providers is akin to “changing the tires on the racecar midrace.”
This makes sense, as companies are already settled into Google’s platform. Making a massive switch on the fly could lead to many other job cuts and companies being axed.
If Google loses, publishers win
If Google loses this massive lawsuit, which seems pretty likely considering it lost its other antitrust cases, then the company could be forced to break up its ad business. We can’t deny that Google will lose a ton of money with this venture. According to Google’s annual report (via AP News), the company wracked up more than $31.3 billion in revenue just from AdSense and Google Ad Manager.
If the government rocks the boat on Google’s ad business, then the company could stand to lose greatly. While we’re sure that it won’t put its position as one of the biggest tech companies in the world in jeopardy, it will still be a pretty big hit to its income.
However, we can’t deny that it could have a positive impact on the journalism industry. There will be ample competition in the market. Since Google is running pretty much unopposed, there’s no reason for the company to offer compelling rates for its ads and it’s free to cut the ad revenue it’s providing for publishers.
Major companies that have been struggling to survive could benefit greatly from this. The case won’t be over for quite some time, so we’ll keep you updated on everything that’s happening.
2024-09-13 15:08:50