What you need to know:

• Antitrust action targets Google's advertising business.
• Alleges market power used to bully advertisers and publishers.
• Says acquisitions used to stifle competition.
• Argues the company made it harder technically for businesses to use other products.

Australia's regulators might prefer incrementalism when it comes to regulating digital platforms, but in the US this morning, the Department of Justice has gone thermonuclear and is looking to break Google's advertising business apart.

The department acted this morning in concert with the attorneys general's of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia.

In discussing the action US Assistant Attorney General Jonathan Kanter said, "Because Google dominates every part of the ad tech industry it has the power to impose a surcharge on display advertising transactions in industry where billions of dollars are transacted being instantaneous auctions each year in the US."

He said Google's own documents estimate that it keeps on average at least 30 cents of each advertising dollar that flows through Google's ad tech tools. "For some transactions for certain customers. Google Keep significantly more."

He then outlined five specific examples of the alleged misconduct.

"First, locking in content creators do tiling arrangements. Second, manipulating auctions, including by giving itself a first look, and then a last look advantage over competing ad exchanges. Third, blocking industry participants from using rivals technology, and punishing those that tried for amassing and abusing troves of its rivals bidding data and fifth, depriving customers of choice by degrading the quality of Google's own products. "

The civil suit whacks Google for monopolising multiple digital advertising technology products in violation of Sections 1 and 2 of the Sherman Act.

The complaint alleges that Google monopolises key digital advertising technologies, collectively referred to as the “ad tech stack,” that website publishers depend on to sell ads and that advertisers rely on to buy ads and reach potential customers.

Amongst the alleged misconduct:

• Google has engaged in a course of anticompetitive and exclusionary conduct to neutralise or eliminating ad tech competitors through acquisitions; 
• Wielding its dominance across digital advertising markets to force more publishers and advertisers to use its products;
• Thwarting the ability to use competing products. 

By doing this the DOJ says Google cemented its dominance in tools relied on by website publishers and online advertisers, as well as the digital advertising exchange that runs ad auctions.

Google responded in a company blog written by Dan Taylor, VP, Global ads, refuting the DOJ allegations and saying today’s lawsuit from the Department of Justice attempts to pick winners and losers in the highly competitive advertising technology sector. The post claims the filing largely duplicates a lawsuit by the Texas Attorney General, "much of which was recently dismissed by a federal court."

According to Taylor, "DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees and make it harder for thousands of small businesses and publishers to grow. We’ve already responded in detail to many similar claims made in the complaint led by the Texas Attorney General."

The company's response specifically addressed the most serious of the DOJ allegation directly, then argues that the lawsuit, if successful, would reverse years of innovation, harming the broader advertising sector.

"The current Administration has stressed the value of antitrust enforcement in reducing prices and expanding choice for the American people. We agree. But this lawsuit would have the opposite effect, making it harder for Google to offer efficient advertising tools that benefit publishers, advertisers and the wider U.S. economy. Antitrust cases shouldn’t penalise companies that offer popular, efficient services, particularly in difficult economic times."

Taylor also wrote that the government should not be in the business of "forcing companies to reverse 15-year-old investments that they have nurtured and worked hard to make successful, especially when those investments were already reviewed by regulators and allowed to proceed."

Pervasive and systemic

According to US Attorney General Merrick Garland: “Today’s complaint alleges that Google has used anticompetitive, exclusionary, and unlawful conduct to eliminate or severely diminish any threat to its dominance over digital advertising technologies. No matter the industry and no matter the company, the Justice Department will vigorously enforce our antitrust laws to protect consumers, safeguard competition, and ensure economic fairness and opportunity for all.”

Deputy Attorney General Lisa O. Monaco weighed in: “The complaint filed today alleges a pervasive and systemic pattern of misconduct through which Google sought to consolidate market power and stave off free-market competition. In pursuit of outsized profits, Google has caused great harm to online publishers and advertisers and American consumers. This lawsuit marks an important milestone in the Department’s efforts to hold big technology companies accountable for violations of the antitrust laws.”

The threat to break up the digital behemoth has been long standing, leading some observers to suggest Google parent Alphabet is already well buttressed against such actions.

Local commentators suggest Google has already priced in this latest action. Chris Brinkworth, managing partner Civic Data: "If you look at the steps that Google have been taking over the past few years, you can see the breadcrumbs of where they were hedging that this will happen and investors already know that. First, with Privacy Sandbox but also with Google PAIR [its latest privacy privacy compliant cookie replacement]."

He said that putting itself in a position to deliver ads to the old Doubleclick tech "without using any of that actual owned tech's plumbing and then putting in place a 'privacy codec' of sorts to facilitate, but not keep a copy of the matching of data between external advertisers and external publishers, they've mitigated a very large BAU hit for when/should the break up happen, while making assets more attractive to be snapped up on spin off."

The case, one of a plethora looming for big tech's titans, is likely to run for some time.