IP Law Daily, TECHNOLOGY/INTERNET NEWS: Several states added to Justice Department suit against Google for alleged monopolization of digital advertising technology products, (Apr 20, 2023)

By Seth Abrams, J.D., M.A.

Reply brief, in support of its motion to dismiss, was also filed by Google.

Two recent developments occurred in the suit brought in federal district court in Alexandria, Virginia by the Justice Department and several states challenging Google LLC’s (Google) alleged monopolization of digital advertising. The Justice Department announced the addition of nine additional states to the lawsuit and filed an amended complaint to reflect this change. Google also filed its reply brief in support of its motion to dismiss the claims brought against it (U.S. v. Google LLC, April 17, 2023, Brinkema, L.).

The Justice Department had filed the antitrust lawsuit against Google alleging violations of both Section 1 and Section 2 of the Sherman Act by monopolizing multiple digital advertising technology products. The original complaint described the online advertising space as a market in which $5 trillion of digital display advertisements are shown each year. The Justice Department alleged that Google has “corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising.” To thwart competition in the market, “Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies.” The complaint alleges that Google sought to “(1) neutralize or eliminate ad tech competitors, actual or potential, through a series of acquisitions; and (2) wield its dominance across digital advertising markets to force more publishers and advertisers to use its products while disrupting their ability to use competing products effectively.”

New plaintiffs. The Justice Department announced that the Attorneys General of Arizona, Illinois, Michigan, Minnesota, Nebraska, New Hampshire, North Carolina, Washington, and West Virginia have joined the civil antitrust suit brought by the Antitrust Division and several states Attorneys General through the filing of an amended complaint. The existing state Attorneys General already part of the case are those of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia.

Reply Brief. Google also filed its reply brief to its previously filed motion to dismiss. In it, Google makes four primary arguments: (1) the plaintiffs’ market definitions fail as a matter of law; (2) monopoly power was not alleged in the market for ad exchanges; (3) the various types of alleged conduct do not support plaintiffs’ monopolization claims; and (4) plaintiffs fail to allege that the United States is a direct purchaser in any alleged market.

The first argument is that the plaintiffs’ market definition fail as a matter of law, and in its reply brief, Google argued that plaintiffs’ “case hinges on artificial market definitions gerrymandered to exclude Google’s most powerful rivals.” In response to plaintiffs’ argument that these are factual questions that are not resolvable on a motion to dismiss, Google responded that the “[c]omplaint itself identifies several major competitive alternatives to Google yet pleads no facts to plausibly exclude them from the relevant markets.” To Google, plaintiffs repeatedly draw distinctions in defining the market which are conclusory and implausible. These include: (1) its market for “open web display publisher ad server;” (2) a market which excludes in-house Publisher Ad Servers, like Facebook; and (3) a market which excludes “video and app ads.”

The second argument on reply was that monopoly power was not alleged in a market for ad exchanges. In making this argument, Google was asserting that “[p]laintiffs cannot satisfy their obligation to plead monopoly power in the ad exchange market by bootstrapping on their allegations of anticompetitive conduct.” Google argued that it only “accounts for only about half of certain open web ad exchange transactions” and “plaintiffs cite no case in which a firm was found to have a monopoly when its rivals account for nearly 50% of the alleged market.” The claim also fails because it “conflates the two distinct elements that a plaintiff must allege separately to state a Section 2 monopolization claim: monopoly power and exclusionary conduct.” Furthermore, Google argues that 50% market share is insufficient for an attempted monopolization claim.

The third argument on reply was that the various types of conduct alleged do not support the monopolization claims. This conduct included the acquisitions of DoubleClick and Admeld, which Google claims are being challenged “long after closing.” This also includes the ad exclusivity agreements, which Google asserts the complaint is deficient in allegations about the “terms and conditions” that Google imposes. In contrast, Google argues that the allegations against it are a “straightforward and lawful refusal to deal with rival ad exchanges and publisher ad services.” Google also argued that the complaint does not make a single allegation that Google excluded rival ads servers through its pricing features.

Google’s final argument on reply was that the damages claim must be dismissed because plaintiffs did not allege that the United States, as an advertiser, “directly purchased ad tech services in the alleged markets for open web display.” According to Google, plaintiffs have only made a vague assertion that web display advertising was purchased, and neither established exception—cost-plus contract or control—applies here.

The Case is No. 1:23-cv-00108-LMB-JFA.

Attorneys: Aaron Teitelbaum for the U.S. Tyler Garrett (Freshfields Bruckhaus Deringer US LLP) for Google LLC.

Companies: Google LLC

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