Google avoids break up of ad tech business in US lawsuit

A US federal judge declined to force Google to sell its online advertising exchange on Wednesday, sparing the company the harshest penalty the Justice Department had wanted and giving Alphabet a decisive win in a case it had already lost per merits.

Google gets to keep AdX

U.S. District Judge Leonie Brinkema, sitting in Alexandria, Virginia, rejected the government’s request for Google to lose ownership of AdX, an exchange where publishers run instant auctions to sell ad space. Publishers pay Google a 20% cut on these sales.

The DOJ had argued that a forced sale was the cleanest way to restore competition. Google countered this argument by stating that divesting the exchange would be technically messy and leave customers stranded in a long, painful transition. The tech giant also told the court it had proposed an earlier offer to sell AdX as part of settlement talks with European regulators, and argued that the DOJ’s version went too far.

Judge Brinkema then sealed her order for 14 days to allow both sides to request redactions. This means the specific behavioral remedies intends to impose will remain not public for about two weeks.

Guilty verdict with a soft landing

The case, brought to the courts by the federal government and a coalition of states in 2023, accused Google of unlawfully protecting monopolies in the software that publishers use in serving ads and in the exchanges that connect ad buyers with sellers. The states argued that Google trapped publishers into AdX via its ad server.

In April, the court found Google liable for violating U.S. antitrust law in the ad-tech markets. However, the court did not agree that the company broke any laws using the tools it built for advertisers, despite agreeing that Google illegally locked publishers into its ad exchange. The network unit that the DOJ wanted to disinherit accounted for about 12% of Alphabet’s revenue at the time of the suit.

Google’s VP of Regulatory Affairs, Lee-Anne Mulholland, said the company was “very pleased the Court rejected the DOJ’s proposal to break apart tools that help small businesses reach new customers and grow.” The company has moved separately to appeal the underlying liability finding made in the court.

Three big cases, little structural change

This is the third consecutive time a court has gone against a U.S. attempt to break up a large technology company. A Washington judge last year rejected the FTC’s bid to make Meta forcibly shed Instagram and WhatsApp, ruling the agency failed to prove Meta held a social media monopoly.

In Google’s own search case, a separate judge declined to force a sale of the Chrome browser and instead ordered the tech firm to share search data and stop requiring partners to bundle apps.

The pattern raises a real question regarding the capacity of the courts to rein in Big Tech’s dominance. Google seems to have emerged from this stretch of legal uncertainty largely unchanged and free to focus on building new positions in AI, with the current DOJ showing little appetite to stand in the tech giant’s way.

This approach from the U.S. looks very lenient compared to Europe’s. EU regulators have hit Google with more than $10 billion in antitrust fines in recent years, including a $3.5 billion ad-tech penalty last September, a $1.7 billion ad-tech fine in 2019, a $4 billion mobile fine upheld in 2022, and a $2.7 billion search fine in 2017.

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