US DOJ’s Google lawsuit offers second shot at the tech giant’s advertising empire as Texas fights separate battle

Google is now fighting essentially the same battle in two different courts against two different coalitions of enforcers, broadening its exposure to a potential court loss that could see it forced to divest parts of its digital advertising business.

Today’s US Department of Justice complaint is the second major antitrust suit filed against Google by the enforcer in recent years. Jonathan Kanter, the current assistant attorney general for the DOJ's antitrust division, was preceded by Makan Delrahim, who sued the company for allegedly monopolizing the search market in late 2020. That case is set to go to trial in the District of Columbia this year.

Today’s case joins a crowded field of public and private litigation seeking to curb the tech giant’s market power across the digital economy. At least in terms of its core allegations, the DOJ lawsuit broadly mirrors an existing lawsuit brought more than two years ago by a group of state attorneys general led by Texas.

In September last year, a New York federal judge in that case denied Google’s bid to have the case dismissed, but did strike the claim that Google and Facebook agreed to stifle innovation in the space through an agreement codenamed ‘Jedi Blue’. The lawsuit has had a bumpy ride, with Google succeeding in convincing the US Judicial Panel on Multidistrict Litigation to pull it out of a Texas federal court and consolidate it with other cases in New York.

Both complaints have been couched in terms of protecting a basic tenet of democratic society: a vibrant and competitive press, at risk from a monopolist sapping its revenues. Both cite Google’s acquisition of DoubleClick in 2008 as a key moment for the display advertising industry, with the tech giant buying its way to a dominant position in the publisher server and advertising exchange market. And both seek to wield the tools of Sections 1 and 2 of the Sherman Act to unravel Google’s digital advertising empire.

Neither case is pursuing individual executives at the company for civil or criminal violations.

Kanter’s explanation

At a press conference today, Kanter was asked about the duplicative nature of the suit, and gave a hint of how that came about. “First and foremost, we conducted our own investigation and that investigation occurred over many years. It involved an investigation in meticulous detail by the antitrust division,” Kanter said.

“That resulted in a complaint that’s nearly 150 pages and in these 150 pages we detail many facts, many episodes, that individually and in the aggregate have maintained numerous monopolies,” Kanter said. “While there may be some similarities with other cases that are filed, we are focused on our case, the results of our investigation, and we believe it paints a compelling case,” he said.

But Kanter, opening his remarks, referenced the very same document that was unsealed in the Texas suit in 2021 in which a senior Google executive analogized its dominant position in ad tech to being like Goldman Sachs or Citibank owning the New York Stock Exchange.

“Is there a deeper issue with us owning the platform, the exchange and the huge network? The analogy would be if Goldman or Citibank owned the New York Stock Exchange,” Kanter said, reading the Google email from his notes.

“The answer to Google's rhetorical question is yes, indeed, there is a deeper issue,” Kanter said.

Double trouble

Reading between the lines of Kanter’s statement, it’s not too hard to understand what happened. Some years ago, when enforcers were probing numerous arms of Google’s business, Texas decided it was ready to sue Google. But the DOJ and the states it was working with decided they needed more time.

Now two parallel blocs of states, somewhat split between Democrats and Republicans, are on the offensive. The Texas-led lawsuit is backed by Alaska, Arkansas, Florida, Idaho, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nevada, North Dakota, South Dakota, South Carolina, Utah, and the Commonwealth of Puerto Rico.

Today’s lawsuit has seen eight different states throw their weight behind the DOJ: Virginia, California, Colorado, Connecticut, New Jersey, New York, Rhode Island, and Tennessee. Tennessee Attorney General Jonathan Skrmetti and Virginia Attorney General Jason Miyares are the only two Republicans to sign up to the DOJ’s case — at least so far.

That split has now created an unusual double legal headache for Google.

Two shots

For enforcers, these dual lawsuits mean they get two chances to take down Google for the same core alleged violations. The legal doctrine of collateral estoppel means the same plaintiffs can’t relitigate the same issue. But it doesn’t stop different groups of plaintiffs from fighting the same case.

The New York case is not expected to go to trial until 2025 at the earliest. The vagaries of the different federal courts and the calendars of individual judges mean that, at least in theory, the DOJ’s case in US District Court for the Eastern District of Virginia could even go to trial before that, despite being filed more than two years later.

For Google, it creates a conundrum around discovery. Will the DOJ want to start discovery all over again, deposing executives and seeking documents? Or will it first ask for everything the tech giant has already given the Texas-led plaintiffs, before making a decision on what else it might need?

Another important part of the DOJ’s case today is that it is seeking damages as a consumer of Google’s advertising services. That means it has the right to bring the case to a jury, and Google can’t demand a bench trial before a single judge.

Google could seek to have the DOJ’s case consolidated in New York, but that still wouldn’t in itself stop the litigation from proceeding along different tracks, with two separate trials.

Long narrative

Today’s complaint attempts to tell a two-decade story of Google’s ad tech dominance, going back to 2000 when it launched AdWords two years after the company’s incorporation. What really changed the game was Google’s $3 billion purchase of DoubleClick in 2008 — a deal blessed by the US Federal Trade Commission despite some privacy concerns — in which Google bought a publisher ad server that already had a 60 percent market share, the DOJ said in today’s complaint.

“The DoubleClick acquisition vaulted Google into a commanding position over the tools publishers use to sell advertising opportunities, complementing Google’s existing tool for advertisers, Google Ads, and set the stage for Google’s later exclusionary conduct across the ad tech industry,” the DOJ said.

Google knew that because publisher ad servers are “sticky” and have very high switching costs, publishers rarely switch, the DOJ complaint said. “Nothing has such high switching costs. ... Takes an act of God to do it,” a former DoubleClick CEO said in another internal email that Kanter read at the press conference today.

Google then moved to entrench its dominance by connecting a revamped DoubleClick for Publishers, or DFP, with its ad exchange — a platform that enables the buying and selling of digital inventory through an instantaneous computer auction.

“Google forged an exclusive link between Google Ads and DFP through the AdX ad exchange. If publishers wanted access to exclusive Google Ads’ advertising demand, they had to use Google’s publisher ad server (DFP) and ad exchange (AdX), rather than equivalent tools offered by Google’s rivals,” the DOJ alleges in the new complaint. “In effect, Google positioned itself to function simultaneously as buyer, seller, and auctioneer of digital display advertising.”

The DOJ outlined 10 specific steps starting with the DoubleClick purchase in 2008 and continuing through steps such as its $400 million purchase of ad optimization firm AdMeld in 2011 that, while each was allegedly anticompetitive in its own right, collectively gave Google unprecedented market power over the ad tech stack.

“These interrelated and interdependent actions have had a cumulative and synergistic effect that has harmed competition and the competitive process,” harming competition and consumers without any procompetitive justification, the DOJ said.

If the facts are similar, the way the two groups of enforcers approach the narrative at trial could diverge. Enforcers may sing the same song, but they can use different tunes. And one may be more appealing to a jury than another.