US seeks to break up Google's digital ad business in new antitrust trial

After deflecting the US Justice Department's attack on its illegal monopoly in online search, Google is facing another attempt to dismantle its internet empire in a trial focused on its abusive tactics in digital advertising.

The trial scheduled to begin Monday in an Alexandria, Virginia, federal court will revolve around the harmful conduct that resulted in US District Judge Leonie Brinkema declaring parts of Google's digital advertising technology to be an illegal monopoly. The judge found that Google has been engaging in behaviour that stifles competition to the detriment of online publishers that depend on the system for revenue.

Google and the Justice Department will spend the next two weeks in court presenting evidence in a remedy trial that will culminate in Brinkema issuing a ruling on how to restore fair market conditions.

Although the judge hasn't set a timetable for making that decision, it's unlikely to come down before the end of this year because additional legal briefs and courtroom arguments are expected to extend into November before Brinkema takes the matter under submission.

No matter how the judge rules, Google says it will appeal the earlier decision, labelling the ad network as a monopoly. Appeals can't be filed until the remedy is determined.

The case, filed in 2023 under President Joe Biden's administration, threatens the complex network that Google has spent the past 17 years building to power its dominant digital advertising business. Besides accounting for most of the USD 305 billion in revenue that Google's services division generates for its corporate parent Alphabet Inc., digital advertising sales provide the lifeblood that keeps thousands of websites alive.

If the Justice Department gets its way, Brinkema will order Google to sell parts of its ad technology a proposal that the company's lawyers warned would invite disruption and damage to consumers and the internet's ecosystem. The Justice Department contends a breakup would be the most effective and quickest way to undercut a monopoly that has been stifling competition and innovation for years.

Google believes it has already made enough changes to its Ad Manager system, including providing more options and pricing options, to resolve the issues the Brinkema flagged in her monopoly ruling.,  The legal battle over Google's advertising technology mirrors another showdown that the company recently navigated after another federal judge condemned its dominant search engine as an illegal monopoly and then held remedy hearings earlier this year to consider how to stop the misconduct.

In that case, the Justice Department also proposed a severe crackdown that would have required Google to sell its popular Chrome browser, but US District Judge Amit Mehta decided a less dramatic shake-up was needed amid a search market being reshaped by artificial intelligence technology in a decision issued earlier this month.

Even though Google didn't agree with all aspects of Mehta's decision, the ruling was widely seen as a slap on the wrist a sentiment that has helped propel Alphabet's stock price to new highs. The 20 per cent gain since Mehta's decision helped make Alphabet only the fourth publicly traded company to reach a market value of USD 3 trillion an increase of more than USD 1 trillion since Brinkema branded Google's ad technology as a monopoly in April.

In an indication that the outcome of the search monopoly case might sway things in the advertising technology proceedings, Brinkema asked both Google and the Justice Department to address Mehta's decision during the upcoming trial.

As they did in the search case, Google's lawyers have already been asserting in court papers that AI technology being used by ad network rivals like Meta Platforms is reshaping the way the market works and overriding the need for the Justice Department's radical proposals.

The Justice Department is fighting for a remedy that would vanquish a past that has been overtaken by technological and market transformations in the way digital ads are consumed," Google's lawyers argued leading up to the trial.