After years of inertia, the Department of Justice (DOJ) is taking an aggressive stance towards Big Tech, signaling a resurgence of antitrust enforcement with the potential to reshape the world as we know it. Regulators in the United States and the European Union are addressing Big Tech’s dominance, long perceived as a well-kept secret. This article focuses on the antitrust lawsuit against Google’s ad-tech practices, highlighting the debate between structure and conduct in antitrust.
The DOJ’s efforts began with a landmark ruling in August 2024, finding Google guilty of maintaining an illegal monopoly in the web search market, by, among others, paying to be the default search engine on major devices. The DOJ’s action marked a shift from years of permissive policies toward vertical mergers (conduct-based approach), signaling a focus on addressing anti-competitive effects proactively rather than reacting to them after they occur (structure-based view). As a result, Google’s breakup is now looming over the company and the tech industry in general, more likely as a matter of how, than when. Moreover, the EU is pursuing its own case on Google’s ad-tech monopoly, with growing calls for a “once-in-a-generation” opportunity to order Google’s break-up.
On September 9, the DOJ targeted Google’s monopolization of the ad-tech market contrary to Sections 1 and 2 of the Sherman Act. At the heart of this case is the critical role of ads in online ecosystems: publishers sell ad space to generate revenue, while advertisers buy it to reach consumers. Transactions between advertisers and publishers rely on ad exchange mechanisms (i.e. an auctioneer), which match publishers and advertisers through automated, high-speed auctions. The advertiser with the highest bid usually wins, and their winning ad is displayed on the publisher’s website.
Why is this a problem? The DOJ alleges that Google has monopolized the ad-tech market by controlling advertisers, publishers and the ad exchange itself – the central node where these transactions occur. This control has effectively “locked-in” both advertisers and publishers, stifling competition.
Publishers elect to engage in direct sales (one-on-one negotiations) or indirect sales (through a publisher ad server) with advertisers. For indirect sales, publishers can choose only one publisher ad server, as switching between many is extremely costly. On the other side of the transaction, most small advertisers are represented by Google through Google Ads (an ad network), which possesses a large set of unique data. Publishers and advertisers can only be matched through an ad exchange, which earns a revenue share only on winning bids. Even though advertisers pay publishers, the ad tech (the ad network and the ad exchange) retains a portion of the sum. Large publishers with the resources to multi-home (i.e. use multiple ad exchanges to secure favorable transactions) drive competition by forcing ad exchanges to compete both for selection by publishers and against one another to provide the most favorable transactions and best matches.
Google’s market dominance stems largely from its 2006 acquisition of DoubleClick, which gave it control of both the dominant publisher ad server (DFP) and ad exchange (AdX). Essentially, by assuming all the roles – buyer (Google Ads), seller (DFP) and auctioneer (AdX) – the control remains in Google’s own hands. In 2011, Google also acquired AdMeld, a yield management firm enabling publishers to multi-home across ad exchanges, and used it to enforce exclusivity with DFP and eliminate competition.
Practically, publishers are now compelled to single-home with one publisher ad server. DFP is the only viable means to have access to Google Ad’s demand, which is almost exclusively on Google’s ad exchange. Therefore, a potential competitor to Google’s publisher ad server (DFP) would need to enter both the publisher ad server and the ad exchange market at scale to compete. Finally, the practice of dynamic allocation enables publishers to multi-home. However, Google’s actions, including the implementation of Unified Pricing Rules, interfere with dynamic allocation by preventing publishers from freely distributing their inventory to multiple exchanges. Specifically, Unified Pricing Rules force publishers to offer the same pricing terms across all ad exchanges, making it difficult for them to benefit from using multiple ad exchanges.
These vertical acquisitions (among others), have allowed Google to implement anti-competitive measures, including restricting demand to AdX, offering AdX advantages, and manipulating bids to favor its platform. The DOJ claims that these actions have led to a series of anti-competitive effects, including (1) higher prices and margins for Google by channeling transactions through its ad-tech; (2) reduced competition due to scale and diminished multi-homing; (3) limited choice and control for publishers and advertisers; (4) information asymmetry; and (5) stifled innovation.
The pending judgment reflects a broader policy shift under the Biden administration towards neo-Brandeisian antitrust, prioritizing prevention of monopolies over post-hoc regulation. In particular, Google has been engaging in post-merger anti-competitive behavior, which was facilitated through its pre-merger actions. This raises critical questions: why were the mergers that led Google to dominate the ad-tech market allowed in the first place? And what different standards would disallow them today?
This can be explained by understanding the underlying context. The mergers and acquisitions that Google engaged in occurred during a time when the neo-liberal view prevailed in antitrust policy, which favored ex-post intervention (conduct-based approach) over ex-ante regulation (structure-based approach). This led to a lenient stance, permitting horizontal acquisitions and more limited vertical ones. Conduct-based approaches generally focus on what companies do rather than their size or market share, being concerned about the breaking up of companies because of alleged harms on innovation and efficiency. Structure-based advocates argue that conduct remedies are reactive and insufficient to address entrenched dominance. They believe that structural issues (such as market concentration, barriers to entry, mergers & acquisitions) inherently lead to anti-competitive practices and harm long-term competition.
The main question therefore turns to whether we should intervene before potential monopolies form or catch them later. Are we more concerned with under or over-enforcement of antitrust rules? False negatives or false positives? In that regard, ex-post remedies are much more painful, given that a break-up of Google is going to affect all market actors in a much more significant way, including users. Taking action upfront while taking into account the constant need for innovation – despite the risk of being overly inclusive – could alleviate the need for continuous and usually failed monitoring of Google’s conduct and prevent its current alleged monopoly position. The DOJ should be getting at promoting competition before monopolistic power takes root.
I’d like to thank Professor Talha Syed for the last point in the legal analysis of this article, as well as his overall help and support. I’d also like to thank Zara Tayebjee for her enthusiasm, support, and help.