Google proposes breaking up ad tech business to prevent antitrust lawsuits

Google has proposed separating parts of its ad tech business to prevent an antitrust lawsuit by the U.S. Department of Justice, The Wall Street Journal reported.

Google is proposing to restructure the company’s auction unit and place online advertising in a separate company owned by search engine parent Alphabet. Depending on the assets involved, this could be worth billions of dollars.

Proposal indicates investigation is nearing completion

The Justice Department has been investigating allegations that Google abused its power as a digital advertising broker and auctioneer for some time. As recently as October 2020, it also sued the company, saying it illegally used its power to tie down competitors.

Currently, the department is preparing a lawsuit alleging anticompetitive behavior that could be filed sometime this summer.

Google is under fire from multiple directions

The latest charge comes on the heels of three EU antitrust lawsuits in which Google was fined $1.6 billion for abusing its position as the dominant search engine between 2006 and 2016.

Search engines are also facing Litigation from multiple states, it accused the company of operating a monopoly. However, Google has moved to dismiss the case, saying it is inaccurate and unsubstantiated.

Additionally, a bipartisan bill was introduced in Congress in May to break up the company’s digital advertising business.This Competition and Transparency in Digital Advertising Law Companies that process more than $20 billion in digital ad deals annually will be barred from participating in multiple parts of the digital advertising process.

In a statement, a Google spokesman acknowledged the growing competition in online ad tech, while insisting that it had “no plans to sell or exit the business.”

Splits could change the ad auction process, reduce costs

Whether or not the Justice Department agrees with the proposal or the case goes to trial, this latest charge could affect digital marketers broadly.

If Google’s ad-tech unit is broken up, it could open the door for other digital advertising companies to take a bigger share of the market. This heightened competition could lead to lower prices as each company tries to undercut rivals in its share of ad revenue.

Last year, Google’s ad revenue exceeded $209 billion.

resource: Wall Street Journal

Featured Image: ByEmo/Shutterstock

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