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Google faces antitrust allegations over its ad-buying network

Aaron Pressman
EU wants to divide and conquer Google

While the European Union’s parliament grabbed plenty of headlines calling for the break up of Google (GOOGL), a potentially more significant antitrust controversy has been brewing back at home.

Some advertisers are complaining that Google is pressuring them to use its ad-buying software, for which there are many competing products, whenever they want to interact with the company’s market leading display ad placement network. A lawyer for the Federal Trade Commission has interviewed some advertisers about this alleged tying, Digiday reported on Tuesday.

Google acquired its popular display ad platform, the DoubleClick Ad Exchange, in the $3.1 billion Doubleclick acquisition in 2007. The platform gives advertisers a place to find web publishers with openings to run ads.

Three years later, it grabbed Invite Media’s ad management software for $81 million. Now called the Doubleclick Bid Manager, the software helps advertisers place ads across multiple ad exchange networks.

Some advertising executives say Google is now pressuring ad exchange buyers to use the company’s bid manager software.

Google has faced many similar complaints in the past and the FTC has chosen not to take any action. This time around, the search behemoth is denying the allegations flat out.

“Of course, we try to maximize (return on investment) for our partners by giving them the best deal and technology assistance possible, but do not by any means require any partners to use DoubleClick Bid Manager or buy on the DoubleClick Ad Exchange,” Mountain View, Calif.-based Google said in a statement.

Unlike earlier allegations that Google was promoting its own travel or restaurant listings over those from competitors, the Doubleclick charge strikes at the core of one of Google’s most important businesses. Google collects about one out of every three dollars spent on digital advertising worldwide, more than four times the share of its closest competitor, Facebook (FB), according to data from Emarketer. Looking only at mobile digital ads, Google has a 50% share.

But even if there were some veracity to the charges, the FTC would have a difficult time bringing a case against Google. Volatile online markets are notoriously challenging for antitrust enforcement.

The FTC hasn’t brought a similar tying case since 1994, notes David Balto, former policy director of the agency’s Bureau of Competition and senior adviser to former chairman Robert Pitofsky.

“Back then, the Internet was just a fantasy in some science fiction books,” Balto says. “The FTC has looked at cases of bundling in technology markets and come up with nothing. In high tech markets, there obviously are efficiencies for customers to use things together.”

In Europe, antitrust regulators have been investigating Google for the past four years under fierce political pressure to take some action from businesses there. The EU’s new competition chief, Margrethe Vestager, says she will review all the Google allegations before moving ahead. Last week, the EU parliament, in a symbolic vote, called for splitting up Google.

Google's Class-A shares were nearly unchanged on Tuesday, closing at $538.59.

Yahoo (YHOO), the parent of Yahoo Finance, competes with Google in the search and display advertising markets.