U.S. sues Google for allegedly breaking antitrust laws with its ad business The Justice Department and eight states have filed an antitrust lawsuit against Google, saying the company has worked to squash rival technologies and choke off competitors.

U.S. files second antitrust suit against Google's ad empire, seeks to break it up

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ARI SHAPIRO, HOST:

The Justice Department and eight states are trying to break up Google. Today, they filed a lawsuit alleging that Google abuses its vast power over online advertising. They're asking a federal judge to force Google to spin off its ad empire into a separate business.

NPR's Bobby Allyn joins us for more in today's All Tech Considered. Hi, Bobby.

BOBBY ALLYN, BYLINE: Hey, Ari.

SHAPIRO: What is the core of the Justice Department allegation here?

ALLYN: The suit says that Google has spent years building a system for online advertising that boxes out competitors. They argue that Google has a monopoly over online ads and is hurting web publishers and U.S. consumers. And, Ari, here is why the Justice Department thinks so. Google, of course, sells ad space online, but they also own the tools that websites use to display online ads. And they operate the largest auction house where ad transactions take place.

So to hammer their point home, DOJ prosecutors cited an internal email from a Google executive who once raised concerns about this arrangement and put it this way - it's as if Goldman Sachs owned the New York Stock Exchange. Here's Attorney General Merrick Garland at a press conference today in Washington announcing the suit.

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MERRICK GARLAND: For 15 years, Google has pursued a course of anticompetitive conduct that has allowed it to halt the rise of rival technologies, manipulate auction mechanics to insulate itself from competition and force advertisers and publishers to use its tools.

SHAPIRO: So Garland is arguing that Google is abusing its power in the online advertising world. And what are prosecutors asking the court to do about it?

ALLYN: Prosecutors say Google should have to spin off its advertising arm from the rest of the company. Break up Big Tech - we've heard that before. It's long been a rallying cry, right? Well, now the Justice Department is saying that to a federal judge. But Google's advertising business and Google Search are so intertwined that, you know, breaking up the company would be a very daunting and very drawn-out process.

SHAPIRO: And what is Google saying about this?

ALLYN: Yeah. Google says prosecutors are trying to rewrite history. To understand what they're saying, let's back up for a moment. One way Google has become so massive in advertising has been by gobbling up other ad companies. And a very key acquisition happened in 2007, when Google bought a company called DoubleClick, which owned very popular online advertising tools. Now, at the time of the deal, you know, it was approved by federal regulators, including the Justice Department. Now, more than 15 years later, federal prosecutors want to undo the deal. So Google says prosecutors, if they got their way and were able to unwind the company, both advertisers and websites would see their costs go up.

SHAPIRO: And is that true?

ALLYN: You know, Ari, there's really no consensus on this question. Some experts agree with the Justice Department that, yeah, breaking up Google could bring in more competition. And, you know, maybe the way ads are sold online would become more competitive. But others say, you know, it's going to fix one problem and then introduce another, right? The online advertising system right now is highly automated. Advertisers engage in these instantaneous auctions to find the right audience. And some say if that system was less centralized, so if Google owned less of it, it could become a big mess. And yes, it's possible that it becomes more expensive for both the buyers and the sellers of ads.

So it's important to point out here that this comes at a really tough time for Google, right? We heard last week that Google laid off 12,000 employees because of uncertainty around things like advertising spending, which has been trending down in recent months. So Ari, this Justice Department lawsuit just really adds to Google's headaches right now.

SHAPIRO: NPR's Bobby Allyn, thanks a lot.

ALLYN: Thanks, Ari.

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