UPDATED 19:19 EDT / DECEMBER 16 2020


Texas and nine other Republican-led states accuse Google of online ad stranglehold

Texas Attorney General Ken Paxton and nine other states have slapped Google LLC with a lawsuit accusing it of anticompetitive practices in its online advertising business.

The complaint filed today targets Google’s alleged stranglehold of the online advertising technology market. Paxton announced the lawsuit in a video posted to Twitter, though the full complaint is not available at this time.

In the video, the attorney general accuses Google of abusing its “monopolistic power” to harm competitors in the online advertising industry. He said it engages in “false, deceptive, or misleading acts” while operating its buy-and-sell auction system for digital ads. He added that Google was effectively controlling pricing and engaging in market collusion to rig those auctions.

Through those actions, Paxton said Google has effectively eliminated all competition to its internet advertising empire and “crowned itself as the head of online advertising.”

Arkansas, Idaho, Indiana, Kentucky, Mississippi, Missouri, North Dakota, South Dakota and Utah have joined Texas in the lawsuit. Notably, just like Texas, all of those states are Republican-led.

Paxton’s complaint also named Facebook Inc. as a “co-conspirator” that harmed competition through an unlawful agreement with Google to rig auctions and fix prices. The complaint alleges that when Facebook announced in 2017 that it was planning to compete with Google in the ad tech market, the search engine giant cut a deal granting it certain advantages in auctions it runs in the mobile app advertising inventory.

Google was quick to respond to the accusations, denying that it has engaged in anticompetitive behavior. “Attorney General Paxton’s ad tech claims are meritless, yet he’s gone ahead in spite of all the facts. We’ve invested in state-of-the-art ad tech services that help businesses and benefit consumers. We will strongly defend ourselves from his baseless claims in court,” the company said in a statement.

Facebook did not respond to the accusations at the time of wring.

Google’s online advertising operation is a massive money spinner, generating the vast majority of the $160 billion in annual revenue it generates. But that business has attracted criticism because Google controls every step in a complicated system that connects buyers to advertisers. Critics say the process gives Google an unfair edge over its competitors. Google built its online advertising business up through acquisitions such as its $3.1 billion buyout of adtech firm DoubleClick in 2008.

Holger Mueller, an analyst with Constellation Research Inc., told SiliconANGLE that fair competition is key for markets to function properly and that if there are any doubts over this that can be proven then watchdogs need to act.

“That’s the case today with Texas vs Google, but it’s interesting that this is not happening at a federal level,” Mueller said. “We’ll have to wait and see what evidence Paxton thinks he has. Hopefully this is not just a publicity lawsuit, as it’s has become ‘à la mode’ to beat up on large technology vendors recently.”

In October, Google was slapped with landmark antitrust case that was filed by the U.S. Department of Justice, accusing it of abusing its position in the smartphone market to force partners such as Apple Inc. and Samsung Electronics Co. Ltd. to make Google the default search engine on their devices.

Google could soon be hit with a third lawsuit involving a bipartisan coalition of states led by the attorneys general of Colorado and Nebraska, Politico reported today.

Photo: :D/Flickr

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