Google‘s antitrust woes mounted considerably this week.
On Thursday, 38 state attorneys general brought a new suit in federal court in Washington, D.C., echoing the Justice Department’s previously filed allegations that Google systematically blocked competitors for internet search services and search-related advertising. That suit came a day after Texas and nine other states filed a suit accusing the company of monopolising the market for digital ad sales. The Texas suit alleges that Google has gained dominance over all aspects of the business of connecting online publishers with online advertisers.
In its response to the AGs’ lawsuit, Google said it faces competitors across search, advertising and virtual assistant software.
“We look forward to making that case in court,” said Adam Cohen, director of economic policy for Google, in a blog post.
The AGs, however, aren’t the only plaintiffs with new claims about the company’s allegedly monopolistic dominance in the market for digital ad sales. Two private class actions asserting similar allegations against Google were filed this week, one brought on behalf of the digital media publisher Genius and two smaller online publishers and the other by the publisher Sweepstakes Today.
Google, meanwhile, is already defending a consolidated antitrust class action filed in May by digital advertisers. A Google filing last month in that case may offer a hint of how the company intends to defend the Texas AG suit and the publisher class actions. (Google lawyers John Schmidtlein and Benjamin Greenblum of Williams & Connolly did not respond to my email requesting comment.)
Google moved on Nov. 9 to dismiss the advertisers’ complaint. Some of its arguments are specific to the digital advertisers serving as named plaintiffs but the company also asserted an argument that would apply in the Texas and publisher cases: The accusations that Google monopolises the market for online digital advertising falls apart when the market is properly defined.
MARKET DEFINITION “OUT OF STEP WITH REALITY”
The advertisers’ complaint, Google said, defined the relevant antitrust market as ads sold “on the open web.”
Google called that an “undefined” description that unjustifiably excluded companies like Facebook, Twitter, Snapchat and Amazon, which have their own, closed-end advertising systems. But, according to Google, advertising on such websites – some of the biggest in the world – is “reasonably interchangeable” with using Google’s display advertising services to place ads on websites that use Google ad purchasing services.
“Plaintiffs’ effort to carve out popular websites from the relevant market simply confirms that their market definition is out of step with reality,” Google said.
The plaintiffs’ market definition also excluded other advertising deals in which publishers and advertisers connect directly, rather than using Google as a go-between. Google said that was also an improper exclusion that couldn’t be justified by the advertisers’ assertion that such deals were “impractical.”
For that matter, Google said, there’s no reason to limit the relevant market to online advertising.
Antitrust law is based on the premise that monopolists curtail reasonable alternatives to their products for buyers. But according to Google, old-fashioned advertising on television or print media is a reasonable alternative to online advertising. The company cited a 2018 case from the 9th U.S. Circuit Court of Appeals, Hicks v. PGA Tour, in which the appeals court rejected a proposed relevant market defined as advertising between commercial breaks during pro golf tournaments because the market definition did not include different forms of advertising, such as digital ads; ads in golf-related podcasts or radio shows; and even magazine ads.
Once the relevant market definition expands to encompass all reasonable alternatives to online ads placed with Google services, “plaintiffs have no hope of pleading that Google has monopoly power,” Google said.
I asked plaintiffs’ lawyers at Korein Tillery, which filed one of the new publishers’ antitrust class actions against Google, about the company’s relevant market defense. Korein’s Carol O’Keefe said in an email that although the appeals court in Hicks referred in an aside to a wide range of economic substitutes to advertising during live golf events, that dicta won’t affect allegations that Google controlled discrete product markets, not just discrete advertising markets.
“We aren’t complaining that Google has monopolised all means of advertising to a particular subset of consumers,” O’Keefe said. “Rather, we maintain that Google has monopolised the submarkets for particular products or services that are essential to participation in the online display advertising marketplace.”
Defining a relevant market is always a critical issue in antitrust litigation. If Google’s early motion to dismiss the advertisers’ case is a portent, it could determine the viability of claims by the AGs in the Texas suit and the digital advertisers and online publishers suing the company.