Google Faces a Potential Breakup on Multiple Fronts

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There’s been a lot of attention recently on the government’s antitrust case against Meta, in part because Mark Zuckerberg, the founder and CEO, spent three days testifying in court about his company’s alleged anticompetitive tactics. (Klaudia Jaźwińska wrote about the case in this newsletter last week.) That case is just starting to get underway. But another Silicon Valley behemoth is arguably in an even worse position, having lost not one but two landmark antitrust decisions, about two different aspects of its business: Google, which has been found to be guilty of anticompetitive conduct in both its search and online advertising operations. As these cases proceed through the remedy phase, the government is expected to argue that Google should be forced to sell off significant chunks of its business. And those sales—if and when they actually come to pass—could change the way that online publishing works in some fundamental ways.

The latest decision against Google came last week, when Leonie Brinkema, a district court judge in Virginia, said in a 115-page ruling that the company had acted illegally to maintain a monopoly in online advertising technology. The Justice Department and a group of states sued the company in 2023, arguing that this monopoly allowed it to charge higher prices and squeeze out competitors. Judge Brinkema said the government proved that Google’s exclusionary conduct “substantially harmed [its] publisher customers, the competitive process, and, ultimately, consumers of information on the open Web.” 

News publishers were among those celebrating the ruling: Danielle Coffey, the president and CEO of the News/Media Alliance, said that the decision marked “a big day for the news media industry after enduring so many years of extortionist fees and diminishing ad revenue from Google’s abuse of its market power.” Online publishers, including most major news outlets, carry digital advertising that helps finance their operations. Those ads appear as a result of an auction process that in some cases is carried out in the milliseconds between when a user clicks on a link and when the site loads. Publishers use a tool called an ad server to manage their ad space, and it interfaces with online ad exchanges, which manage the flow of ads; advertisers in turn use tools on the other side of the transaction, including ad networks, to provide the ads. It’s a multibillion-dollar industry, one that is crucial to the lifeblood of many publishers, and Judge Brinkema ruled that Google has an illegal monopoly on two pieces of that triangle: the ad servers that publishers use, and the ad exchanges where they find and bargain for access to digital advertising. (Google, not surprisingly, saw things differently: Lee-Anne Mulholland, its vice president of regulatory affairs, said that publishers “have many options and they choose Google because our ad tech tools are simple, affordable, and effective.”)

The government argued that one of the things that made Google’s behavior anticompetitive was the way that it tied its various services together, forcing publishers to use only its products, something the courts have ruled is a hallmark of anticompetitive activity. One of the Justice Department’s submissions was a 2017 email that an advertising executive sent to her boss, in which she wrote that “the value in Google’s ad tech stack is less in each individual product but in the connections across all of them.” As Bloomberg explained, advertisers using the Google Ads network are only permitted to place bids through Google’s own exchange, AdX (with limited exceptions). In 2020, Google Ads sent bids for eighteen million ads to AdX, but only about three or four million to non-Google exchanges. Certain functions of Google’s ad exchange, including what is called “real-time bidding,” are also only available to publishers that use its ad server.

The Justice Department said in its submissions to the court that Google controls about 87 percent of the US market for ad servers, the software that is used by publishers and websites, and about 91 percent of the market for that kind of software globally. Google’s ad exchange has about 47 percent of the US market and 56 percent globally, the Justice Department told the court. The government also claimed that Google’s ad network, which many advertisers use to manage the supply of ads, controls about 88 percent of the US market and about the same amount of the global market, but Judge Brinkema ruled that this was not proven to be a separate and distinct market, and therefore Google’s share was not relevant to the government’s antitrust case.

The question of market definition is also critical to the Meta case. As Jaźwińska explained last week, the Federal Trade Commission argued in filing its lawsuit that Meta controls a significant share of something called the “personal social networking” market, and therefore that its acquisitions of Instagram, for one billion dollars in 2012, and WhatsApp, for nineteen billion dollars in 2014, should both be unwound. However, the company and some of its defenders—including Ben Thompson, who writes a technology analysis newsletter called Stratechery—argue that “personal social networking” is not a distinct and identifiable market at all, and therefore the government’s case should fail because it excludes obvious competitors such as TikTok.

Last week, Judge Brinkema gave both sides in the Google advertising case a week to propose a schedule for the next phase of the case, which is known as the remedy phase, where the government argues for specific changes to Google’s business in order to correct what the judge has found to be illegal conduct. In its statement of claim, the Justice Department asked the court to force Google to sell several pieces of its ad technology business; the judge could pursue that remedy or could decide that additional remedies are required. Either way, Google is likely to appeal, which means the case will drag on, possibly for years, before it reaches a conclusion.

Meanwhile, the other antitrust case against Google has just entered the remedy phase. The Justice Department argued this week that Google should be forced to sell its Chrome browser and make other changes after a court found last year that the company had gained an illegal monopoly over internet search by using what the government called a “feedback loop” of anticompetitive practices. The search case was originally filed in 2020 and went to court before Amit Mehta, a district court judge in DC, for an eight-week trial in 2023. The government argued that Google’s deals with companies like Apple and Samsung to make its search engine the default on most smartphones—deals that cost Google more than twenty-six billion dollars a year—were designed to rig the market in the company’s favor.

In addition to selling Chrome, the government asked Judge Mehta to force Google to stop the company from paying Apple and Samsung to make Google search the default on smartphones, and has suggested that if this doesn’t make the search market more competitive within five years, Google should be forced to sell off Android, its mobile operating system, which powers a majority of the world’s smartphones. The Justice Department also raised the possibility that Google’s dominance in search could help it dominate the emerging market for artificial intelligence—by making its AI engine the default in its browser and search engine—and that this would be bad for consumers.

Google’s lawyers called the government’s proposed remedies “extreme” and “fundamentally flawed,” and argued in court that the company “won its place in the market fair and square.” The company also said that the changes the Justice Department is recommending would allow competitors to capitalize on Google’s hard work, and ultimately harm competition in the search market rather than promoting it. But one publishing-industry executive said that the more than twenty billion dollars that Google was found to have paid Apple in 2022 to be the default search service on its smartphones “came from the pocketbooks of marketers and from publishers who suffered by not getting the revenue that they should have gotten.”

The cases against Google and Meta are part of a larger—and in many ways bipartisan—movement by government regulators to curb what they argue is the excessive power of major tech companies. The Justice Department has also sued Apple, arguing that the way the company ties its smartphones and other devices together with its online app store has locked in consumers and harmed competition and choice in the smartphone market. And the FTC has sued Amazon, accusing it of using its dominance in online retailing to harm small businesses and online competitors. Observers say President Trump’s choices for the head of the FTC and the top antitrust role in the Justice Department indicate that the administration wants to continue to crack down on the market power that large tech companies have. If both Google and Meta are ultimately forced to reshape their businesses, Evelyn Mitchell-Wolff of Emarketer told Reuters, then “the digital advertising landscape could be unrecognizable in five years.”

Other notable stories:

• CNN’s Donie O’Sullivan spoke with pro-Trump media personalities who have been folded into the White House press corps under the new administration’s stated policy of opening access to “new media” outlets. (“There’s no doubt about it: I’m pro-Trump,” Brian Glenn, of Real America’s Voice, said.) Politico’s Ian Ward also wrote about this new presence in the briefing room, concluding that “the divide between the MAGA-friendly media and their more mainstream counterparts has become visible.” During a briefing yesterday, Karoline Leavitt, the press secretary, called on a beanie-clad Tim Pool, a right-wing content creator (who got caught up in this wild story last year). In the words of Mediaite, he “used the extraordinary access” to “simply tee up” Leavitt to attack the media.
  
• Liam Scott, who covered press freedom for Voice of America until the Trump administration moved to gut the broadcaster last month (and has since written a couple of times for CJR), has launched a Substack, the Press Freedom Report, to continue his work on the beat. In the first edition, Scott shines a light on cables that US embassies around the world have sent to the State Department expressing concern about the geopolitical impact of the gutting of VOA and its sister broadcasters. The cables “affirm concerns raised in recent weeks by press freedom groups and US lawmakers,” Scott writes, including the potential for the cuts to juice the “proliferation of Russian and Chinese propaganda.”
  
• Politico’s Michael Schaffer examined how Jeff Bezos, the owner of the Washington Post, went from presenting himself as a respected DC institutionalist and aspiring salon convener to meddling in his paper’s editorial policy and sucking up to Trump—and concluded that Bezos didn’t change, DC did. Bezos is above all a pragmatist, and in the past, “the betting was that the Trump term might just be a blip, and the old, institutionalist culture would reassert itself, perhaps stronger than ever,” Schaffer writes. “That’s not the case any longer—and Bezos may have realized it before the Washington old guard.”
  
• The Dispatch, an upstart right-leaning news outlet, is acquiring SCOTUSblog, a closely followed site that covers the Supreme Court; according to the New York Times, the nonprofit that currently owns SCOTUSblog will be dissolved as part of the deal, though key staffers at the site will sign long-term deals with The Dispatch, part of “an effort to keep the site’s editorial voice intact.” Not coming over: Tom Goldstein, the cofounder of SCOTUSblog, who was recently indicted on tax-evasion charges related to his poker career. He is contesting the charges.
  
• And CBS News reports that Pete Hegseth, the Fox News host turned embattled defense secretary, recently ordered that a room in the Pentagon be retrofitted with a makeup studio that can be used for TV appearances, after a large mirror with lights was already installed. A defense official told CBS that Hegseth is doing his own TV makeup rather than paying for a makeup artist, but Hegseth dismissed the story as “totally fake,” adding, “No ‘orders’ and no ‘makeup.’”

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