Alphabet’s Google is facing yet another lawsuit over its dominance in digital advertising after exchange operator PubMatic took the tech giant to court, accusing it of illegally monopolizing the ad technology sector.
The case, filed on Monday in federal court in Virginia, seeks billions of dollars in damages and is the latest addition to lawsuits by an advertising exchange in recent months. It comes on the heels of a landmark April ruling in which a judge found Google liable for maintaining unlawful monopolies in ad servers and ad exchanges.
PubMatic takes on the giant
PubMatic, an ad exchange whose clients include Elon Musk’s X, said it had spent years competing against what it sees as a rigged system.
“It felt like for many years no matter how well we innovated there was a barrier holding us back,” Rajeev Goel, PubMatic’s CEO said in an interview. “That barrier wasn’t the limits of our technology. It was Google’s illegal monopoly. Every time we adapted or innovated, Google found new ways to stack the deck.”
The lawsuit alleges that Google gave itself unfair advantages in auctions for digital ad space, limiting access for rivals and reducing the revenues available to publishers. PubMatic had once been a takeover target for Google in 2011, but the search giant instead opted to buy rival AdMeld.
The company now says its legal action is not only about recovering damages but also about restoring fairness to the market. “The company’s lawsuit isn’t just about money, but making sure online advertising markets work,” Goel said.
Antitrust rulings against Google set the stage
In April, U.S. District Judge Leonie Brinkema ruled that Google had illegally monopolized the markets for ad servers and exchanges, siding with the U.S. Department of Justice and several states.
A separate trial beginning this month will determine what remedies Google must face. The Justice Department has argued that Google should be forced to divest its AdX exchange and make its technology fully interoperable with competitors. Google, however, insists that such a breakup is unnecessary and has proposed instead to allow outside monitoring of its systems for three years while improving compatibility with rival platforms.
The PubMatic lawsuit follows a similar action filed last month by OpenX Technologies, another advertising exchange, which also accuses Google of suppressing competition. Alongside these cases, Google faces a raft of lawsuits from state governments, publishers, and advertisers alleging that its dominance has distorted the market and harmed innovation.
Google has also entered hot water in Europe, as reported by Cryptopoitan. The EU slapped a €2.95 billion ($3.5 billion) fine on the search leader for what it claims to be an abuse of its dominance, as Google favored its own ad exchanges over others, giving them a competitive edge.
Implications for the ad tech industry
Digital advertising accounts for a sizeable chunk of Alphabet’s revenues, and a forced sell-off of its ad exchange could alter its business model. Analysts say that losing control of AdX would not only weaken Google’s grip on the market but also open the door for rivals such as PubMatic, OpenX, Amazon, and The Trade Desk to claim more market share.
For regulators, the case represents a test of whether structural remedies, breaking up parts of a dominant firm, can be effectively implemented in digital markets. The DOJ’s push for divestiture signals a tougher stance than the behavioral remedies that big tech companies have typically agreed to in the past.
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