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Google offers concessions to fend off U.S. antitrust lawsuit

Google offers concessions to fend off U.S. antitrust lawsuit

The Justice Department has been investigating allegations that Google abuses its role as a broker and auctioneer of digital ads

Alphabet Inc.'s Google has offered concessions in an attempt to head off a possible U.S. antitrust lawsuit aimed at its massive ad-tech business, according to people familiar with the matter, a sign that legal and regulatory pressures on the tech giant are coming to a head.

As part of one offer, Google has proposed splitting parts of its business that auctions and places ads on websites and apps into a separate company under the Alphabet umbrella, some of the people said. That entity could potentially be valued at tens of billions of dollars, depending on what assets it contained.

It couldn't be determined whether any offer short of asset sales would satisfy the U.S. Department of Justice, where antitrust officials have signaled a preference for deep structural changes to Google's ad-tech business, rather than promises to change business practices, the people said.

The Justice Department has been conducting a long-running investigation into allegations that Google abuses its role as both a broker and auctioneer of digital advertisements to steer itself business at the expense of rivals. The department is preparing a lawsuit alleging Google's ad-tech practices are anticompetitive, an action that could be filed as soon as this summer, the people said.

"We have been engaging constructively with regulators to address their concerns," a Google spokesman said in a statement. "As we've said before, we have no plans to sell or exit this business." He added: "Rigorous competition in ad technology has made online ads more relevant, reduced fees, and expanded options for publishers and advertisers."

A Justice Department spokeswoman declined to comment.

In the European Union, where Google faces another ad-tech investigation, Google has made an offer to settle a different allegation of anticompetitive conduct related to YouTube, some of the people familiar with the matter said.

As part of that offer, Google would allow competitors to broker the sale of ads directly on the video service, those people added. Currently, the only way to buy ads on YouTube, the world's biggest video-sharing platform, is to use Google's ad-buying tools.

A spokeswoman for the European Commission, the EU's top antitrust enforcer, declined to comment on its investigation into Google's ad tech business, which she said was ongoing. "As always, in our investigations, we cooperate with other authorities" including the Justice Department, she said. Reuters earlier reported Google's offer related to YouTube in Europe.

Antitrust watchers have long awaited a second U.S. case against Google following the Justice Department's lawsuit almost two years ago alleging the company used anticompetitive tactics to maintain its dominant position in online search. Google has denied the allegations, and the case is ongoing.

Google's willingness to offer concessions to avoid a U.S. lawsuit is an evolution of the company's strategy for handling growing legal and regulatory pressure.

The U.S. Department of Justice seal on a podium in Washington, D.C. on Thursday, Aug. 5, 2021.


In addition to probes by the Justice Department, the EU and U.K., Google is preparing for a trial in a lawsuit from U.S. states led by Texas that argues the company is running a monopoly that harmed ad-industry competitors and publishers. Google is awaiting a judge's decision on a motion to dismiss the case and has said the suit is "full of inaccuracies and lacks legal merit."

Meanwhile, U.S. senators have proposed a new antitrust bill that could force Google to divest parts of its ad-tech business. And the EU agreed this spring on two new major tech regulations, including one called the Digital Markets Act, that puts new fairness obligations on companies like Google.

Any moves by Google to restructure parts of its ad-tech business could shake the digital advertising industry. Advertisers are slated to spend more than $600 billion on digital ads world-wide this year, according to eMarketer, and Google plays a major role as an intermediary in such sales. Last year, Google's business of brokering the sale of ads on other websites and apps accounted for $31.7 billion of revenues, roughly 12% of Alphabet's total.

Publishing executives have long complained that Google's market power has allowed the company to charge higher commissions, cutting into their revenue from digital ads. Rival ad tech firms have likewise complained that Google uses its market power to steer business away from them.

WASHINGTON, DC - NOVEMBER 05: Executive Chairman of Alphabet Inc., Google's parent company, Eric Schmidt speaks during a National Security Commission on Artificial Intelligence (NSCAI) conference November 5, 2019 in Washington, DC. The commission on


Many detractors say that antitrust enforcers should have attempted to block Google's 2007 deal to purchase DoubleClick, at the time a prominent ad-serving company to publishers across the web which also operated an exchange where those ads were auctioned to advertisers. Some rivals say that deal — then worth only $3.1 billion — plus several others in subsequent years helped Google build up significant power as an ad broker responsible for a sizable chunk of Alphabet's nearly $1.6 trillion market capitalization.

Today, Google tools can handle each step of the buying and selling of digital ads, effectively representing both advertisers and publishers as the former bid on ads for the latter, using an online auction exchange Google itself also operates. Regulators have been investigating whether Google is abusing its role along those steps of each transaction. Google has denied taking any unfair advantage.

"We are concerned that Google has made it harder for rival online advertising services to compete in the so-called ad tech stack," said Margrethe Vestager, the EU's competition chief, when announcing the bloc's investigation last year.

Another point of contention from rivals and regulators has been Google's move over half a decade ago to require advertisers to buy ads on YouTube using Google ad tools rather than third-party tools. Google ad-tech rivals from the time say that decision kneecapped competition because YouTube is by far the biggest online-video site, pushing advertisers to work more with Google than with rivals when buying ads.

That is in part why some Google detractors say that a separation of some of Google's ad-tech businesses may be the only way to help restore competition.

A huge increase in the number of mergers coming before the U.S. Federal Trade Commission for antitrust reviews is limiting its ability to investigate deals in a timely fashion, the FTC said on Tuesday.


Google has navigated a number of antitrust probes over the past decade. In early 2013, the company resolved a U.S. Federal Trade Commission investigation by agreeing to some voluntary changes to its practices, over objections from some of the agency's staff, The Wall Street Journal reported. Google attempted to settle a similar dispute in the EU, but EU officials eventually rejected three separate offers from Google to settle before filing the first of three sets of antitrust charges in 2015.

EU officials eventually found Google had violated the bloc's antitrust laws in each of its separate cases, fining the company roughly $8.4 billion and ordering changes to its business practices. Google has fought all three of those decisions in EU courts, but in the meantime has had to comply with them. Google search results in Europe show product ads from Google competitors, and Android phones activated in Europe prompt users to select their default search engine from a list of options that includes Google competitors.

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