Gannett (GCI), the United States' largest newspaper publisher by circulation, has joined a handful of domestic and overseas regulators in claiming that Google's (GOOG, GOOGL) online ad tech empire is an illegal monopoly.
In a civil lawsuit filed in Manhattan federal district court on Tuesday, the publisher alleges that the Alphabet-owned tech giant is wielding its dominance in the ad tech market to force Gannett and other publishers to sell ad space to Google at artificially low market rates.
Gannett owns roughly 500 digital news brands, 200 local news publications and the nationally-circulated USA Today.
The practice, the suit claims, is responsible for a 70% decline in news publication's advertising revenue since 2009 despite a nine-fold increase increase in the online digital advertising market to $200 billion.
The lawsuit is somewhat unique in that it raises a company's challenge to Google’s stronghold in the ad tech market, which so far has predominantly been attacked in suits by state and federal regulators, and in investigations by regulators overseas.
In April, a journalist and former tech editor for UK news publisher The Guardian filed an antitrust complaint against Google. On behalf of UK publishers, the lawsuit alleges that Google's ad tech practices of preferencing its own products violate UK competition law.
A consulting group, Sterling International, alleged in a purported class action case filed in 2020 that Google was illegally operating its ad server business, though no activity has been filed in the case since February 2021.
On June 14, the European Commission (EC), the EU's antitrust watchdog, said in a preliminary report summarizing its investigation into Google's advertising businesses that it wants Google to divest parts of that business to cure anti-competitive concerns.
In January, the US Justice Department (DOJ) and eight US states brought an action saying Google unlawfully leveraged its monopoly in the ad tech market to block competitors from entering.
Nine additional states have since joined in that litigation. The DOJ says Google should be required to divest a host of entities that allow it to carry out the allegedly offending behavior.
'Demolished' competition
Gannett's claims are similar to those of regulators in that they allege Google is unfairly leveraging its control of online ad technology — tools that advertisers and publishers use to buy and sell online ad space.
Specifically, Gannett says Google's practices are giving publishers no choice but to sell to Google at prices lower than those available to Google’s competitors.
"The result is dramatically less revenue for publishers and Google’s ad-tech rivals, while Google enjoys exorbitant monopoly profits," the complaint states.
Gannet says Google has monopolized both the ad server market — which identifies space available for sale, solicits bids, and picks a winner — as well as the pool of available ad buyers, largely blocking buyers from participating in competing ad exchanges.
Google's digital ad exchange, DoubleClick Ad Exchange, controls more than 60% of the exchange market, and its ad server, DoubleClick for Publishers, controls more than 90% of the ad server market.
"These claims are simply wrong. Publishers have many options to choose from when it comes to using advertising technology to monetize — in fact, Gannett uses dozens of competing ad services, including Google Ad Manager,” Dan Taylor, vice president of Google Ads said in response to the lawsuit. "And when publishers choose to use Google tools, they keep the vast majority of revenue. We'll show the court how our advertising products benefit publishers and help them fund their content online."
In Google's most recent quarter, its ad revenue totaled $54.5 billion. Approximately $6.7 billion of that revenue was generated by YouTube. Roughly $7.5 billion in ad revenue was generated by the company’s Google Network segment, which includes revenue earned by its ad tech businesses.
Other lawsuits from regulators and news organizations have gone after Google's dominance in the online search and search advertising markets.
In 2020, the US Justice Department filed a civil antitrust complaint against the company, alleging its monopolies in search and search advertising unfairly blocked competition. That litigation is scheduled for a trial in September 2023.
Dozens of US news organizations and publishers have sued Google on similar grounds.
In 2021, a string of separate cases made claims that Google used its dominance in the markets to usurp ad revenue that should have flowed to the news outlets.
On Tuesday, Gannett CEO and chairman Mike Reed published an opinion piece in USA Today saying, "Our lawsuit seeks to restore fair competition in a digital advertising marketplace that Google has demolished... Today, 86% of Americans read the news online. As a result, news publishers depend on digital ad revenue to provide timely, cutting-edge reporting and content that communities across the country depend on."
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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