CMA and DoJ Are On a Google Hunt 🕵️‍♂️

Hey there! 👋

Google's in hot water as both the UK Competition and Markets Authority (CMA) and the US Department of Justice (DoJ) have launched major accusations against the tech giant for alleged anti-competitive practices in its advertising business. The company made more than $200 billion last year from this side of the business alone.

Let’s dive into what happened, and how law firms could be involved.

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What Happened? 🤷‍♀️

The CMA has looked into Google’s advertising procedures and issued a provisional statement, alleging that it suspects a breach of UK competition rules. The competition regulator believes that Google is abusing its dominance in the online advertising space by overcharging and thereby limiting the access of new entrants to its online advertising platform AdX. The report states that Google is engaged in self-preferencing treatment of its own ad exchange platform which is harming advertisers and publishers as well as other competitors.

Why is Safeguarding Competition Important for Digital Markets? 🔐

Many companies see online advertisements as an indispensable leverage tool to grow their profits through increased exposure to potential customers. A 2019 market study conducted by the CMA found that advertisers spend around £1.8 billion per year on online marketing. Many of them continue to opt for Google’s ad services for convenience purposes as a vehicle for their advertisements on apps and web pages. Google’s dominance in this market has now arguably reached the point of monopoly which stifles effective competition and could severely impact the online advertising space in the future.

How Google’s Advertising Ecosystem Works 🌳

The scandal around Google’s alleged anti-competitive conduct centres around AdX, an ad exchange platform operated by Google. Ad exchanges are a form of digital auction where publishers make bids and advertisers provide their own bids in return. The platform then processes this data and conducts auctions in order to match the most appropriate publisher with the most appropriate advertiser and make the advertisement public. The problem for participants in such auctions is that Google charges a 20% fee on any bid being processed by AdX. Google’s ad exchange is also under scrutiny for abuse of dominance through preferential treatment of its own services which drastically reduces competition from its rival exchanges. These are some of the most pressing concerns unravelled by the CMA’s investigations.

Google’s Overseas Lawsuit 🇺🇸

Google has faced a myriad of lawsuits over the past year alone which have given the tech giant monopoly status. This is hurting its reputation in the eyes of investors and the public. Google faces yet another antitrust trial in a Virginia court on the same ad exchange issue in the UK. At the crux of this lawsuit are allegations that Google has breached Sections 1 and 2 of the Sherman Act and that the tech giant’s advertising business should be broken up because it is now a monopoly and rival ad exchanges can no longer compete. If the DoJ is successful against Google in this case, customers of the exchange could flood the courts to seek remedies against the negative effects of the preferential treatment and abuse of dominance exerted upon them.

The Impact on Lawyers and Law Firms ⚖️

Freshfields’ influence: The team defending Google in the US antitrust case is led by Freshfields’ antitrust litigation group which has also defended and completed deals on behalf of the tech giant in the past. This includes a $5.4 billion acquisition of Mandiant two years ago. Breach of antitrust has been a common denominator in many lawsuits filed against other tech leaders such as Nvidia and Apple. This may be an incentive for many law firms to invest more resources into their competition/antitrust departments.

Further claims: As mentioned, the advertisers and publishers affected by the anti-competitive pricing and restrictions may bring further claims against Google, including class action antitrust lawsuits. In the UK, collective or class action procedures can be made in the Competition Appeal Tribunal where a class representative (CR) can formally represent the parties which form the group. 

A potential breakup: Google’s alleged anti-competitive conduct could lead to the multi-billion dollar company being broken up. This could mean a lot of work for intellectual property, restructuring, employment, and corporate lawyers as they try to ease the market into a post-Google era. The US Department of Justice has considered breaking up the tech giant after a federal court found earlier this year that Google has created a monopoly in the search market. 

However, many analysts are sceptical of the chances of a Google breakup and suggest instead that such a case could be stuck in the court system for a very long time.  

I hope you enjoyed this article. See you next week! 👋