The world just received a sneak peek of the what’s heading Google’s way along with other big tech companies when it comes to the antitrust case which wants to dig out dirt about stifling of competition and harming consumers at large.
On Tuesday, the United States Senate grilled an executive from Google over the company’s aggressively dominant position in the digital advertising market.
This session was only meant to be a preview of sorts for the kind of arguments Alphabet Inc. (NASDAQ: GOOGL) owned Google is going to face from various antitrust regulators in the near future.
The US Justice Department along with nearly every single state attorney general has been gunning after the massively profitable digital advertising business that Google built from scratch.Â
Finally, it seems like the Department is getting ready to file the antitrust lawsuit against the internet giant in the coming few weeks.
Yesterday, Donald Harrison who helms the position ‘president of global partnerships and corporate development’ at Google faced a tough time answering the questions of senators. He was confronted with questions about both the scale and scope of the company’s digital advertising business.
In one such question, referring to how effectively Google’s tools help linking advertisers to publishers, Senator Josh Hawley asked Harrison if he can pinpoint any other company which enjoys a similar kind of ‘dominance and concentration’ that Google does across every layer of the ad stack.
He also pointed out data from UK’s antitrust regulator which showed the Larry Page and Sergey Brin founded company currently holds dominant positions, running from 40% to more than 90% in various parts of the market of ad technology.
To this, Harrison who was testifying remotely responded by saying that both publishers and advertisers are free to choose platforms other than Google. In an attempt to put weight on his claim he also pointed out how the prices in digital advertising have fallen over the years as evidence to the fact that competition is in fact still robust.
Of course, the answer being not completely satisfactory the senators kept pushing Harrison to spill the beans.
They asked him about how Google pulls data from the ancillary services such as search and Gmail to improve their ad business. Senator Amy Klobuchar, in particular, wanted to know why the business of digital advertising should not be regulated “to prevent conflicts of interest, inappropriate self-dealing and trading on inside information” in a similar way to how the financial markets are regulated.
To this, Harrison once again was observed to be repeating himself wherein he spoke about individual choices and how Google sees there’s plenty of competitors out there. At the end, however, he added that he doesn’t market failure as a probability in the near future and thus this business wouldn’t require any such regulations.
Lastly, Google’s stance on conservatives is also something that Harrison was made to answer. Republican Mike Lee of Utah, asked why did the tech giant decide to ban a conservative website called The Federalist from its ad network and how isn’t that behaviour a stark example of market power.
Harrison, to this particular query, responded that comments on the website had violated their policies against racism and thus Google couldn’t allow ads to show up next to any such commentary like that.
All in all, be it no matter how Google views the digital advertising landscape, it is very much clear that Google and Facebook indeed have a stronghold on digital ad market globally, and have been enjoying ‘duopoly’ for long now.
In 2019, over a whopping 83.3% of Alphabet’s total revenue came from Google’s advertising business alone. The company’s ads revenue reached an all-time high of $134.8 billion in the previous year, representing 15.8% YoY growth.
Now it remains to be seen how prepared the company execs are for the future grilling that they are all due to be subjected to when the lawsuit gets filed. We will keep you updated on all the developments that come next. Until then, stay tuned.
