US Investigators ‘Lean Toward’ Breaking Up Google’s Ad Tech Business

The US state attorneys general investigating Google over antitrust issues are leaning toward pushing for the company’s ad business to be broken up, CNBC reported, citing unnamed sources.

Nearly all of the US’ attorneys general have been taking part in the probe for several months, alongside a similar investigation by the US Department of Justice.

Both the states and the Justice Department may file suits against Google within the next few months, CNBC’s sources said.

While the state attorneys general are leaning toward focusing on a breakup as part of their lawsuit, they have not definitively ruled out alternatives.

Breakup

That could include imposing restrictions on the way Google’s advertising business operates, or including both restrictions and a breakup as options in the lawsuit, CNBC said.

It is rare for the US government to break up monopolies, but examples do exist, including Standard Oil in 1911 and AT&T in the 1980s.

Antitrust lawsuits against IBM in the 1980s and Microsoft in 2000 concluded with remedies other than breaking the companies up.

Google is the dominant player in online advertising, which accounts for the vast majority of its roughly $161 billion (£127bn) in annual revenues.

The company’s two main acquisitions in the ad business both occurred more than ten years ago – it bought DoubleClick for $3.1bn in 2007 and AdMob for $750m in 2009.

‘Network effects’

The Federal Trade Commission decided not to challenge Google’s DoubleClick acquisition at the time by a 4-1 vote.

But in her dissenting opinion, Pamela Jones wrote that the deal would give Google access to data that would “contribute to, and exacerbate, network effects”.

“The Google/DoubleClick combination is likely to ‘tip’ both the search and display markets in Google’s favour, and make it more difficult for any other company to challenge the combined firm,” Jones wrote.

Google says it competes against large, vertically integrated companies such as AT&T, Comcast and Verizon, and says that the online advertising business is highly competitive with numerous players.

Google said in a statement that it is engaging with the state and Justice Department investigations and does not comment on speculation.

‘Crowded industry’

“Our digital advertising products compete across a crowded industry with hundreds of rivals and technologies, and have helped lower costs for advertisers and consumers,” the company said.

The states and the Justice Department have been working closely together on their probes, which focus on Google’s search, ad technology and Android businesses.

Last week Justice Department investigators reportedly approached Google rival DuckDuckGo asking for detailed information on ways to increase competition in the online search market.

The European Union in 2018 fined Google 4.3 billion euros (£3.86bn) after finding that “illegal restrictions” Google had placed on Android allowed it to “cement its dominant position in general internet search”. Google is appealing.