The US government is investigating whether Google engages in “tying” — the practice of bundling different products together to block out competitors — reported Bloomberg on Thursday. The investigation is part of a larger antitrust case the US government’s Department of Justice is building against Google.
Bloomberg reported that authorities have asked executives of Google’s rival companies about pricing and operations of Google’s network division. The inquiries reportedly focus on establishing whether Google pushes advertisers and publishers to use only its products by offering them discounts or special features, thereby blocking out competitors. Regulators are interested in understanding how Google’s online search business interacts with its network division to increase its share of the digital advertisements market, reported Bloomberg.
The US Department of Justice and a group of attorneys general are currently working on bringing an antitrust lawsuit against Google in the coming weeks. However, the Wall Street Journal reported earlier this month that some of the lawyers working on the investigation thought the case needed more as they still had to to sift through millions of pages of documents to find the evidence needed to win in court.
Google controls much of digital advertisement market
Last month, a House subcommittee on antitrust heard from the CEOs of Big Tech companies Amazon, Apple, Facebook and Google. During Google CEO Sundar Pichai’s deposition, Representative Pramila Jayapal pointed out that the company controls 50-60% of the ad exchange market. And, by controlling middlemen like Google’s Display & Video 360 (DV360) and Google Ads, the company controls 90% of the buy-side market.
Jayapal had said Google had rigged the entire online advertising market by controlling both buy and sell-sides via its Ad Exchange – a marketplace to buy and sell advertising marketspace. She noted that Google could, due to this dominance, was able to set low rates as a buyer of ad space compared to newspapers, thereby depriving them of ad revenue, and ultimately sell it for higher revenue to small businesses who depend on Google for advertising. (Read: Key takeaways from Sundar Pichai’s deposition)
Investigators looking into Google, according to the Bloomberg report, are focusing on all three aspects of its advertising business — the buy-side, the sell-side and the exchange itself.
What else is Google under scrutiny for?
- Decision to limit third-party access to YouTube ads: Investigators are reportedly looking into Google’s decision to stop third parties from dealing in YouTube ads, and forcing the purchase of ads only through YouTube’s own bidding tool. This concern had earlier been raised Representative Kelly Armstrong (R-ND) in the hearing last month. Armstrong had also noted that Google had limited interoperability of third-party analytics on YouTube, thereby forcing advertisers to use Google’s Data Hub for any analysis.
- Use of dominance in search business for advantage in ad business: Google allows advertisers buying search ads (which appear on search results’) to convert left-over funds from daily budgets to buy display ads. This option, that other companies cannot offer, makes Google’s ad exchange the only practical option for publishers.
More coverage on antitrust in the US:
- Apple’s preferential treatment in App Store, coercive practices: 8 key takeaways from Cook’s deposition before the antitrust subcommittee
- Facebook bought, copied, threatened competition: 11 key takeaways from Zuckerberg’s deposition before the antitrust subcommittee
- Amazon targeted sellers, investees, AWS clients with anti-competitive practices: 9 key takeaways from Bezos’s deposition before the antitrust subcommittee