The Google Antitrust Story - "Just Google It"

Credit: Bloomberg

Author: RITHIK RAVINDRAN – Mar 14, 2025
Topic: Antitrust and Tech (Google)
Committee: Government and Law
Committee Chair: ANDREW VANDERKOLK

The Department of Justice’s antitrust case against Google’s advertising monopoly in the search business is a landmark case for the future of regulating large tech monopolies. Their case shows how antitrust frameworks in their current form have several limitations when they are applied to potentially address digital monopolies because they were created for regulating traditional industries. The case will also push forth critical questions about how to balance the increased market competition between the online search advertising market and the overall effect it will have on consumer welfare. Ultimately the case will be a powerful litmus test for the U.S. government to determine if its current legal framework is capable of regulating modern tech giants, potentially setting a precedent for future antitrust action.

The antitrust landscape faces a behemoth challenge as the Department of Justice attempts to take on Google Antitrust in a case over its monopolization in the digital advertising sphere. This case in many ways mirrors the historic antitrust battles of the past such as the splitting of AT&T and Standard Oil. While the AT&T breakup led to increased competition in the telecommunications industry and Standard Oil’s dissolution helped to tackle the concentration of economic power in the oil industry, what differentiates this case is the unique challenge posed by how interconnected all of Google’s varying services are. As we see the tech sector continue to consolidate with a couple of giants such as Meta, Apple, and Amazon having the pricing power to shape entire industries, the advertising dominance of Google rings alarm bells for policymakers for its significant influence over pricing power and consumer welfare.

The dominance we are seeing in the digital advertising sphere by Google raises tremendous concerns about reducing competition because of the vast overreliance by small businesses on Google’s advertising technologies and platforms. These issues are further aggravated by the government’s inability to effectively regulate digital companies as the legal framework the litigation is building their case on was developed in an era before the computer, and may not be able to deal with the intricacies of modern tech monopolies. The DOJ’s legal challenge marks a turning point in tech regulation, and the case’s result will reveal to the American public the growing insufficiencies of existing legal tools in the face of digital integration or force Washington to face the modern monopoly.

Google’s Market Dominance:

Google has a nearly unparalleled level of dominance in the digital advertising market, as its advertising services reach all sectors of the online economy. Google controlled approximately 26.8% percent of the global digital advertising market which creates about $200 billion in ad revenue. Their closest competitors are Meta with 21.1% and Amazon with 12%, which shows how outsized their influence is in the online advertising sphere. Unlike traditional advertising companies which maintain separate entities that operate and manage ad spaces digitally, Google operates an integrated system that includes data analytics, effective ad placement, and distribution(via its social media and search applications). This cohesive closed-loop system allows Google to collect and analyze significant amounts of data from users to better optimize ad placements, and algorithmically manipulate prices in ways its competitors in the online ad sphere cannot replicate.

The implications of this level of dominance are stark. Small businesses constitute a significant portion of Google Ads users and they often rely heavily on the platform for visibility and revenue generation. Google’s overwhelming market share means these businesses have no particular choice but to use its services even though there are many concerns about the limited transparency in pricing and the increased dependency on Google’s advertising infrastructure. These issues are indicative of the structural vulnerabilities in digital advertising and the broader tech sector where an entity can come in and dictate terms for the majority of the market. The question of whether Google’s dominance of the online advertising market has reached the point where it is oppressing competitors is exactly what the DOJ’s case is probing, and is the central tenet of the argument. Unfair practices such as algorithmic manipulation of prices and supply chain dominance in the online advertising sphere are why there is an urgency to address the current dynamics of the sector.

DOJ’s Allegations Against Google

The Department of Justice is litigating against Google as they are alleging the company is utilizing its market dominance in the online advertising space to unfairly stifle its competitors for making up ground. The DOJ says they are capable of establishing a monopolistic control of the online advertising market because Google’s advertising platforms such as AdSense and DoubleClick are uniquely integrated with many of its other services like YouTube and Google Search, allowing them to delineate their advertising platforms from individually owned service entities. By bundling all of these services together, Google allegedly creates barriers for smaller competitors to enter the market and compete effectively as they have to not only compete against Google’s advertising technology but all of Google’s products. The complaint from the DOJ focuses specifically on how Google forges exclusive agreements with publishers and advertisers when utilizing their platforms, serving as a key mechanism to prevent rivals to also allow them access to the same distribution channel. In the DOJ’s eyes, this practice has completely distorted the digital advertising ecosystem to favor Google because they can unilaterally consolidate more power in the sector.

Another major focus of the DOJ’s case is Google’s alleged manipulation of auction systems, which determine how digital ads are bought and sold. Critics argue that Google uses its control through their algorithms over these auctions to prioritize its services which deeply disadvantages competing advertisers and publishers who use other platforms. The DOJ has been contending these practices have a downstream effect on consumers which negatively affects consumers as they may face higher prices as businesses pass on the advertising costs to them. The DOJ is demonstrating to the public by outlining these allegations that Google’s practices violate antitrust laws designed to promote fair competition as Google has no serious intent in promoting consumer welfare.

How Google’s Integration of Services Creates a Monopoly

One of the main tenets of the DOJ’s legal argument is that Google’s integration of services across multiple platforms creates a self-reinforcing monopoly that cannot be beaten in the online advertising space. Google’s unparalleled ecosystem which connects YouTube, Gmail, Google Maps, and the Android operating system allows it to take in troves of user data. This user data gives Google the unique capability to offer hyper-targeted advertising in all of their applications: a service competitors find nearly impossible to match. Furthermore, Google also has complete control over the supply chain for the digital advertising sphere. They dominate each stage of the process, from ad creation (Google Ads), then effective distribution through Google’s Display Network, which gives users access to millions of websites and apps across all their platforms and services. By controlling and dominating every step of the development of online ads, Google has successfully implemented vertical integration in the digital ad sector to maintain commanding control of every aspect of the advertising process.

Such integration creates what economists call a “network effect,” where Google’s services become more valuable as more users and advertisers participate. As a result, advertisers are compelled to stay within Google’s ecosystem, knowing that leaving would limit their reach and effectiveness. Publishers, too, face pressure to prioritize Google’s ad tools to access its vast pool of advertisers. The DOJ argues that this dynamic entrenches Google’s market position and discourages innovation by smaller competitors, who lack the resources to build comparable infrastructure.

How Google Differs from Traditional Monopolies

Google’s monopolistic behavior is completely different from the traditional monopolies we have seen being split up like Standard Oil or AT&T. Unlike those historical giants where their domination came from controlling tangible resources or infrastructure, Google’s dominance lies in its control over data and algorithms. Data because of its importance to the digital economy has often been referred to as the “new oil”, and Google has a unique ability to utilize it for their advertising platforms as they can harvest and analyze tremendous amounts, giving them a competitive edge that many companies can effectively counteract. Furthermore, the interconnectedness of Google’s services is so deep and distinctive, that often the innovations in one of their services end up reinforcing their dominance in another. A good example of this is whenever we see improvements to Google Search, they also enhance the company’s ad-targeting capabilities and thus drive more reinvestment into its ecosystem and increase overall revenue.

The traditional legal frameworks for antitrust practices struggle to deal with the complexities of Google’s monopolistic practices because they were intended to regulate monopolies that operated in more easily delineated markets that also had simpler supply chain structures. Google’s integration blurs these boundaries which increases the difficulty to define where one market ends and another begins. This lack of clarity complicates the DOJ’s task of proving harm under existing laws as they focus on consumer welfare metrics like price increases. Many services appear “free” to users in Google’s case which masks the costs associated with reduced competition, such as lower-quality services and decreased innovation, without any other alternatives to select from. The fundamental difference we see here is truly indicative of the need for modernizing antitrust frameworks capable of addressing the nuances of digital monopolies.

Limitations of Existing Antitrust Frameworks

There are evident limitations in the existing antitrust foundations the DOJ’s case rests upon against Google, as they face tremendous litigatory constraints in outdated enforcement mechanisms and legal standards. The Sherman Antitrust Act (1890) remains the nucleus of the DOJ’s methods for antitrust enforcement, though its digital applicability has continued to evade the prosecutorial talents of the antitrust division. The Federal antitrust enforcement has historically made their arguments around priced-based consumer harm, however this becomes particularly complicated with a digital behemoth such as Google. Many of its core services–Google Workspace, YouTube, Search–are offered free, making traditional price manipulation a difficult legal argument. The DOJ has instead focused on trying to prove harm in reduced ad revenue for publishers through inflated costs. This is legally reminiscent of their case against Microsoft in 1998, where they argued Internet Explorer bundled many products and dwindled effective competition in the tech market.

Even with the success of regulating Microsoft, legal tools beyond the Sherman Act have failed repeatedly to curb the expansion of Google’s digital empire. The Clayton Act (1914), passed to govern merger review, did not prevent the acquisitions of DoubleClick (2007) or AdMob (2009), which were significant deals allowing the company to monopolize the advertising sphere. Google, through these mergers, was able to implement a vertically integrated ad stack, where they could control the supply (advertisers) and the demand) publishers) in digital advertising. The DOJ at the time did not recognize, nor anticipate the long-term consequences of these acquisitions, allowing for Google to establish an ad ecosystem with monopolistic control, making it nearly impossible for challengers to compete. Furthermore, regulatory enforcement has been slow and reactive to the rapid digital expansion of Google’s commercial endeavors. As the trial begins, Google will probably be launching new ads in new markets, and bringing in their latest Gemini models for advanced AI-driven ad targeting.

Consumer Welfare and Market Consequences

Google’s Dominance in digital advertising has a direct impact on the welfare of consumers through its monopolistic control of pricing and challenges to competition. One of the biggest issues with regulating Google is the small business dilemma: Google’s ad tools are indispensable for 65% of small and medium-sized businesses (SMBs), but their cost-per-click (CPC) rates have risen by 18% year-over-year to $2.69 in 2024. This paradox forces small businesses into a high-cost dependency on Google ads, due to their relatively high conversion rate (4-6% click-through rate on average). However, as CPCs rise, marketing budgets are strained, especially for limited capital small businesses.

The short-term impact on small and medium businesses (SMBs) could potentially be disruptive if Google’s online advertising sector were to be forcefully spun off, as a fragmented ad ecosystem in the near term could initially increase marketing costs from inefficiencies, and decreased effectiveness in ad targeting. In the long run, however, we could see that increased competition could lower prices and create more opportunities for businesses to leverage multiple platforms. For example, if Amazon Ads or an independent online advertising network gained traction through court-mandated data-sharing requirements, SMBs could utilize cross-platform arbitrage to shift ad spending to platforms that can offer better rates or a better advertising product for their service.

The DOJ’s Proposed Solutions

The Department of Justice has proposed two key structural remedies: divesting Chrome from Google Search and restructuring the Android operating system. Both face significant hurdles towards enforcement. Theoretically, Chrome could be forced to operate independently and could allow competitors such as DuckDuckGo, Brave, and Perplexity to compete on a neutral platform, the underlying ad infrastructure would still exist for Google through its back-end data ecosystem and thus might maintain some level of dominance in the search industry. Similarly, unbundling the Google Play services with the Android operating system could potentially increase mobile competition, but at the same time could degrade overall user experience and welfare rather than improve it. The true effectiveness of the DOJ’s regulatory solutions depends on whether they can address the underlying advantage in advertising for Google.

Google as The Litmus Test for Antitrust Modernization

Despite the vast limitations the DOJ faces, Google gives the Federal government the potential to set a transformational precedent for the regulation of digital monopolies, if it can be done through effective structural remedies. One of the big questions regulators face is whether forcing Google to break apart its ad business, through the forceful selling of AdX for example, would restore market competitiveness and if Google would reformulate monopolistic dominance in alternative digital markets. Some critics argue that even if Google were forced to divest in the online advertising industry, its control of data and algorithmic advantages would allow it to become a titan in emerging industries such as e-commerce (Google Shopping ) and cloud computing (Google Cloud), which have increasingly diversified the company’s revenue stream from advertising.

Google’s case highlights the legal fragmentation in antitrust enforcement internationally. In the E.U., Google under the Digital Markets Act (DMA) has to follow interoperability requirements which forces them to allow competitors fair access to their platforms. However in the U.S., there aren’t any structural regulations equivalent, as the EU can implement broad, sweeping industry-wide rules, the US follows a case-by-case litigatory approach means even if the DOJ has success in its case against Google, it cannot translate those regulations over to other Tech giants such as Meta, Amazon, Microsoft, Apple, etc. Having such global regulatory discrepancies creates a gray area where internet companies can slightly modify their business operations to remain compliant within a myriad of jurisdictions without fundamentally changing their anticompetitive business practices, creating alarming concerns about regulatory arbitrage.

If the DOJ can succeed in securing strong remedies like a restructuring of Google’s online advertising division through forced sales, it could create a unique precedent for more aggressive future regulatory actions taken by the DOJ’s antitrust division. Platforms such as Meta and Amazon which have businesses built similarly to Google, could see renewed scrutiny, with an established legal playbook. If the case results in limited penalties such as a settlement without structural changes, it could embolden Google and other internet giants to pursue profligate digital imperialism. The outcome of the case will help us determine whether the current legal framework is sufficiently capable of regulating today’s digital monopolies as they did with Standard Oil (1911), or if we will need significant legislative reforms to modernize the pillars of our antitrust foundations, the Sherman and Clayton Acts to keep competition alive in a digital world.