By Washington Examiner
The Department of Justice is suing Google for monopolizing digital advertising.
As we have been saying for some time, the tech giant has used anti-competitive tactics, including its 2008 acquisition of the ad servicing company DoubleClick and its 2009 acquisition of the mobile advertising company AdMob, to build a digital advertising monopoly.
Thanks to these acquisitions, which should not have been approved by regulators at the Federal Trade Commission to begin with, Google now controls the biggest system publishers use to offer ad space, the biggest system advertisers use to buy ad space, and the exchange that matches buyers and sellers.
In the indictment, the DOJ noted that one Google executive described the company’s control of the market thus: “The analogy would be if Goldman or Citibank owned the New York Stock Exchange.” That is about right, and it is very wrong.
This lawsuit follows a 2020 DOJ lawsuit, also against Google, alleging that the company entered into exclusionary agreements with device manufacturers and web browsers that pushed consumers to use their search engine product.
Taken together, these two cases signal a much-needed rethinking of how antitrust law is interpreted. Before the 1970s, the Supreme Court employed multipronged, highly subjective legal standards that left firms with little guidance on what any one judge might or might not consider a violation of the Sherman Act.
The court has since developed a simpler “consumer welfare standard” test that makes enforcement more uniform. Unfortunately, the consumer welfare standard has become too narrowly focused on both court rulings and law enforcement guidelines. Too often, the price for a product paid by consumers has been the only factor considered when judging whether a company’s behavior has been anti-competitive or not. This allowed firms such as Google to escape antitrust enforcement since so many of its products, such as search on Google and video on YouTube, are free, at least in terms of price tag and dollars to consumers.
But price was never the only consideration in the Sherman Act more broadly or the consumer welfare standard more narrowly. What about quality delivered to consumers? If Google, which does not invest in producing news, is capturing the profits of publishers that do produce news, thus lowering the overall quality and quantity of news produced, isn’t that also bad for consumers?
