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DOJ seeks to break up Google's digital advertising

business

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Google accused of shutting competitors out of advertising

technology markets

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Google argues breakup would slow innovation, raise fees,

harm

small businesses

By Jody Godoy

Sept 4 (Reuters) - Alphabet's Google faces

trial in a second antitrust case next week where the U.S.

Department of Justice will challenge how the search giant

monetizes advertising through a system that prosecutors say

harms news publishers.

The case is part of the Biden administration's effort to rein in

Big Tech through antitrust law, and follows a major win for the

Justice Department in a separate lawsuit on Aug. 5 when a judge

found that Google illegally monopolized online search.

While that case focused on Google's ubiquitous search

engine, the trial beginning in Alexandria, Virginia, on Monday

will home in on less conspicuous Google technology that connects

website publishers and advertisers.

Those advertising tools contributed to the more than 75% of

Google's $307.4 billion in revenue last year that came from

advertising.

"Google is far and away the largest seller of advertising on

earth. They touch every part of the industry, if not directly,

then indirectly. Everyone has an interest in Google one way or

another," said Brian Wieser, an advertising consultant and

financial analyst.

The Justice Department and a coalition of states will seek to

show Google broke U.S. antitrust law in its digital advertising

businesses. A victory for the states and Justice Department

would set the stage for them to ask U.S. District Judge Leonie

Brinkema to order a breakup of the company.

The antitrust regulators accuse Google of dominating the

markets for the technology behind website ads by tying its tools

for publishers and advertisers together, staking out a

"privileged position as the middleman."

Google has denied the claims, saying it is not required to

share technological advantages with rivals and that its products

are interoperable with those offered by competitors.

The Justice Department alleges that Google controls 91% of

the market for ad servers, where publishers offer ad space, more

than 85% of the market for ad networks, which advertisers use to

place ads, and over half of the market for ad exchanges.

Google says its share of those markets is 30% or less when

including advertising on social media, streaming TV and apps,

and says the Justice Department's narrow focus on website ads

obscures the fierce competition it faces as those categories

grow.

Google competitors on the advertiser side, such as Trade

Desk ( TTD ) and Comcast ( CMCSA ), and publisher side, such as

PubMatic ( PUBM ), are on the list of potential witnesses.

The case will also highlight how advertising technology has

affected news organizations. One-third of newspapers in the U.S.

have been closed or sold since 2005, according to a Northwestern

University study published last November.

"Journalism is under threat in large part due to

consolidation in the advertising market," Justice Department

antitrust chief Jonathan Kanter said at an event held in June by

the Open Markets Institute, an anti-monopoly advocacy group.

Current or former executives from News Corp ( NWSA ), the

Daily Mail and Gannett ( GCI ), which has also sued Google, may

testify at trial.

Google has focused on small businesses and publishers, some

of whom it plans to call as witnesses at trial. A breakup would

"slow innovation, raise advertising fees, and make it harder"

for small companies to grow, Google has said.

The way Google viewed its ad tech will be a key focus at

trial, with potential testimony from more than two dozen current

or former employees and executives, including YouTube Chief

Executive Neal Mohan, a former Google advertising executive.