Is Google a monopoly on advertising? Could it be split up?

On April 17th (US time), a federal court ruled that Google’s two advertising businesses, which are its main sources of revenue, constitute illegal monopolies.

In her ruling, U.S. District Court Judge Leonie Brinkema stated that Google violated Section 2 of the Sherman Act, an antitrust law enacted in 1890, and that “the bundling of its ad server and programmatic trading system for media outlets deliberately acquired and maintained a monopoly position in the ad trading market.”

This is Google’s second major defeat in less than a year. In August 2024, the company was found to have an illegal monopoly in its online search business as well. As with the previous case, Google plans to appeal the ruling.

Although it may seem unrelated to individuals and small media outlets because they use Google’s ad network “AdSense,” this is an important case that questions the profitability of media outlets, so we will explain it in an easy-to-understand manner.

Google Ads Incident

This ruling is in the “Google Ads Case,” in which a lawsuit was filed in January 2023 against Google seeking the sale of part of its online advertising business.

80% of Google’s revenue comes from its advertising business. Most consumers probably use convenient Google products every day without being very aware of this fact.

Publishers also probably use Google’s advertising products without being very aware of it.

You’ve probably heard that the advertising business is based on the relationship between the side that wants to publish (demand side) and the side that wants to publish (supply side). Google AdExchange is often said to connect the two,
but that’s not accurate.

Google AdExchange (Open Auction)

Google Ad Exchange was launched in 2009 (July 2017 in Japan) by Doubleclick, which was acquired by Google in 2007, and was developed as a supply-side platform (SSP) to complement Google Ad Manager, which was later renamed and integrated into Google Ad Manager, Google Marketing Platform, and Google Ad Exchange, due to a rebranding on June 27, 2018. The platform has been gaining further market share since then.

The product is for the demand side (advertisers and DSPs) who want to place ads on Google’s network to buy and sell Google ad slots (Ad Manager slots, AdSense, YouTube, Google search, etc.). Therefore, it has a different aspect from ad exchanges, which connect the demand side and the supply side.

Google Ad Manager (advertising management platform)

Google Ad Manager, which strongly suggests that its integration with AdExchange is essentially a bundled sale and an exclusive deal, was developed by Google based on DoubleClick DART (Dynamic Ad Targeting/Reporting) developed by DoubleClick in the 1990s.

Its former name was Double Click For Publishers, and the name was also changed along with the rebranding of Google products.

Its main feature is “dynamic allocation,” which maximizes revenue by reflecting prices by comparing and competing GoogleAdExchange with third-party ad networks.

When dynamic allocation was used in an ad space with 1 million impressions per day, the average CPM (revenue per 1,000 impressions) increased from 35 yen to 41 yen by competing AdSense with other ad networks.

Another major feature is OpenBidding, which allows header bidding, which is said to be difficult to implement because it requires programming, to be easily implemented on the server side.

Google AdSense(AdNetwork）

This is an ad network for small businesses developed based on the dynamic behavioral analysis system “Dobule Click” that was acquired by Google Inc.

• It can connect to Google’s ad network regardless of the size of the media
• It does not require complicated inventory management
• It does not require knowledge of advertising transactions

It is an indispensable Web 2.0 open advertising platform in the early days of online advertising, inspired by infoseek, which is made up of these three pillars.

AdMeld’s ad optimization capabilities allow it to centrally manage Google-certified third-party ad networks as part of its inventory of over 120 billion impressions, allowing it to set lower partnership standards than placing directly on AdExchange.

What is the Sherman Act?

The Sherman Act is a federal law enacted in 1890 and is the central law of the US antitrust law. The main provisions of this Act are Article 1, which prohibits unfair restraint of trade, and Article 2, which prohibits unfair monopolies.

Violators of the Sherman Act are subject to criminal penalties of up to $10 million for corporations and up to $350,000 or imprisonment for up to three years for individuals (which may be both). In addition, victims of damages caused by violations of the Sherman Act may bring a civil lawsuit against the violator to recover damages up to three times the actual damages and attorney’s fees.

Related case: “Google・Android Incident”

In July 2018, the European Commission ordered Google to pay a fine of 4.34 billion euros for violating European antitrust law by requiring Android device manufacturers who wanted to pre-install apps from the official app store, Google Play Store, to also pre-install Google Search and the Chrome Browser.

In short, the contract requires that if manufacturers develop smartphones with Android OS, they must pre-install Google Search, the Chrome Browser, and the Google Play Store, or else their sales license will be revoked.

This is the EU’s ruling that Google is intentionally monopolizing the mobile device market.

Meanwhile, in the United States,

On October 20, 2020, the U.S. Department of Justice, in collaboration with judicial authorities from 11 U.S. states, filed a lawsuit against Google in the U.S. District Court for the District of Washington, DC, for violating the Sherman Act. The lawsuit alleges that Google is a monopoly operator in the general search service market, search advertising market, and general search text advertising market, and that the company’s actions have maintained a monopoly in violation of Section 2 of the Sherman Act.

The lawsuit alleges that Google search and pre-installed Chrome prevent rivals such as Bing and Yahoo from entering the market, and that Google advertising (listings) prevents rival companies from monetizing through advertising, thus creating a monopoly.

As of 2025, no final decision has been made on this case due to an appeal by Google.

Google’s acquisitions of the two companies have already been approved by the DOJ?

The acquisitions of AdMeld and DoubleClick, which have had a major impact on the Google advertising scandal, were both approved by the FTC 12 years ago for AdMeld and 15 years ago for DoubleClick.

Since then, the advertising industry has become more competitive and ad technology has continued to evolve rapidly.

Last year, Microsoft acquired Xandr, an advertising platform with a full ad tech stack that serves advertisers and publishers, just like Google and many of its competitors.

The acquisition allowed Microsoft to sign a landmark agreement to build Netflix’s advertising business. The government did not object to the acquisition.

Amazon’s advertising business is currently growing faster than Google’s or Meta’s.

Apple’s advertising business is growing fast and is expected to exceed $30 billion over the next four years. It has also been widely reported that Apple is building its own demand-side platform and expanding its advertising footprint.

Just five years after launching outside mainland China, TikTok has reportedly earned nearly $10 billion in advertising revenue and continues to grow rapidly.

Media companies such as Comcast and Disney, and retailers such as Walmart and Target, continue to invest in building their own online advertising technology services.

There are also specialist ad technology companies like AppLovin, Criteo, Index Exchange, Pubmatic, Magnite, MediaMath, OpenX, The Trade Desk, and Unity — in fact, The Trade Desk was recently ranked one of the fastest growing companies. These may not be household names, but they power a lot of the ads you see every day.

Ad Manager is not mandatory

Federal court judges have ruled that the use of AdExchange requires its use in conjunction with Ad Manager, resulting in a tie-in sale that creates a monopoly on the market, but Google has responded with the following:

Publishers are free to use our ad exchange in conjunction with other ad servers.

The lawsuit alleges that publishers are required to use our ad server in order to use our ad exchange, but that is completely false, and like the Texas Attorney General’s complaint, the new lawsuit does not present any evidence to support that claim.

Publishers can and do use our ad exchange in conjunction with other ad servers.

AdExchange can operate independently

Because it is integrated with the current Ad Manager, it is easy to get the wrong idea, but AdExchange and Ad Manager can be operated independently.

When Ad Exchange is enabled in an Ad Manager account, a top-level ad space with the Ad Exchange + property name as shown in the image above is created.

Then, Ad Exchange tags can be issued for both that space and the ad space belonging to its parent, and these can be used together by submitting them to a third-party ad server.

However, there is a restriction that only one size can be associated with one Ad Exchange ad space (tag), so it is generally recommended to use a passback tag that calls back to Ad Manager.

OpenBidding is just one option

Open Bidding is a competitive response and improvement to header bidding.

The complaint alleges that we blocked competitors’ use of header bidding technology through our Open Bidding program, but the facts do not support that claim.

Header bidding is a tool widely adopted by publishers to increase competition with ad buyers for their ad inventory.

We developed an alternative to header bidding, called Open Bidding.

Open Bidding achieves the same competition within the ad server rather than on the device.

This innovation improves upon the problems associated with header bidding, including longer web page load times, faster device battery drain, and increased fraud.

As Google argues, OpenBidding is just one of many server-side header bidding methods, and it is an undeniable fact that it is essential for monetization for mid-sized media companies that find it difficult to implement client-side header bidding due to cost.

And as Google claims, Open Bidding improves web page load times, reduces battery consumption, and reduces overpayments due to fraud.

Google has never suppressed header bidding.

They are misunderstanding the tools that allow advertisers to bid more efficiently on all exchanges, including ours.

These features were designed to prevent advertisers from accidentally overpaying and allow them to use the savings to purchase ad inventory that reaches a wider audience.

Other companies in the industry, such as The Trade Desk and MediaMath, offer similar services.

We are not chosen, we choose

Finally, let me summarize the opinion of the US Department of Justice from a publisher’s perspective.

Google’s advertising technology is built to work with competitors’ products.

Partners make it easy to choose the products and services they want to use with over 80 rival platforms for publishers and over 700 rival platforms for advertisers.

In fact, there are various advertising platforms such as PubPower, Assertive Yield, and Moneytizer, and some products such as Moneytizer do not depend on Google Ad Manager.

Major publishers nowadays use six different platforms to sell ads on their websites, and advertisers and media agencies use three or more platforms to buy ads on average.

• Media size and characteristics
• Reader convenience and experience
• Operational convenience

Profitability and running costs, etc.

It is likely that there are many cases where companies selectively rely on one or two for various reasons.

However, this is not something they are forced to choose, but something they have to choose.

The Department of Justice is trying to wipe out 15 years of investment by accusing publishers of “forcing them to choose Google,” which could lead to a clear decline in the advertising industry.

However, if this lawsuit is accepted and the advertising business is split up, AdSense will lose a lot of its convenience, becoming no different from a typical ad network or SSP. “Won’t it become much more difficult to use?”

That’s why I’m so worried about the 15 years of investment.