What Happens if the Government Breaks Up Google’s DoubleClick?

When the US government and 17 states submitted their proposed “findings of fact” against Google before the antitrust trial in August, the plaintiffs vowed to hold the tech giant “accountable for illegally acquiring and maintaining monopolies in digital advertising technology.” (It’s worth noting that the incoming Trump administration is expected to take a more moderate approach to the case.)

Rather than analyzing the merits of the Biden administration’s case — the District Court of Colombia has already ruled that Google has illegally maintained its monopoly in the search and text advertising businesses August 5th, 2024 Decision)  —  let’s consider one possible (and intriguing) outcome: the courts dissolving Google’s ownership of DoubleClick. 

It’s not far-fetched. The Wall Street Journal reported that if U.S. District Judge Leonie Brinkema (hearing since Sept. 9 the US’s government antitrust case in Virginia against Google) “rules against Google, she could order the company to sell off parts of its ad-tech business, which by some estimates is worth upward of $100 billion.” According to Google Gemini, a generative AI tool, “As of 2023, Google’s ad-tech business generated approximately $237.86 billion in annual revenue.” That’s 75% of Google’s 2023 revenue.

How did it come to this? First, a refresher. In the Spring of 2007, Google purchased DoubleClick, an early adtech leader, for $3.1 billion. DoubleClick pioneered advancements in managing and growing online advertising campaigns, enabling advertisers to buy inventory from publishers and track campaign performance. The Google Marketing Platform absorbed the DoubleClick product line in 2018, and its revenue is undisclosed in public filings. 

But along the way, largely through acquisitions, antitrust lawyers say Google became dominant on both sides of the ad-selling market — taking a percentage on both the buy-side and the sell-side of the digital ad market — resulting in higher ad prices. Under American law, monopolies are not illegal. How companies behave with their market leverage is what draws the attention of antitrust officials. The government contends that “Google’s conduct has allowed it to persistently charge materially higher fees in the ad exchange market.”

According to Digiday, “A large part of Google’s defense is that publishers have many alternatives when it comes to monetizing their traffic; they simply choose to use the best and safest option, which just so happens to be Google.”

More competition, better browsing

The government contends that by extracting “extraordinary fees at the expense of publishers  … Google’s conduct harms everyone who uses the Open Web.” Consequently, the DOJ filing adds, “As publishers generate less money from selling their advertising inventory, publishers are pushed to put more ads on their websites, to put more content behind costly paywalls, or to cease business altogether.” 

Breaking up the Google Ad Network might decrease the company’s dominant market positioning, thus decreasing its pricing leverage. Google Network manages the company’s “auction-style system that advertisers use to purchase digital ad space.” Reuters reports, “The Network business comprised $31.4 billion of the company’s revenue last year, down from $32.8 billion the year prior.”

Another possible outcome is making it easier for advertisers and publishers to switch ad tech platforms, according to Nikolas Guggenberger, a law professor at the University of Houston. 

Beyond that, there’s the consumer experience to consider. Ars Technica decried “the seemingly major consequences for consumers perhaps harmed by the alleged monopoly. Those harms include higher costs of goods, less privacy and increasingly lower-quality ads that frequently bombard their screens with products nobody wants.”

Tim Vanderhook, CEO of Viant, told Wired that more competition would mean “A substantially improved browsing experience.” He added, “What all in the industry are looking for is fair competition.”

A high-stakes ruling 

Of course,  Judge Leonie Brinkema (who indicated she intends to rule on this second government case by year’s end) is not obligated to order Google to divest a significant piece of its business. However,  Reuters reports that “the Justice Department is seeking, at a minimum, the divestiture of Google Ad Manager, a platform within the Network division.” 

“Divestitures are definitely a possible remedy for this second case,” Peter Cohan, a professor of management practice at Babson College, told the Associated Press. “It could be potentially more significant than initially meets the eye.”

It is interesting to note that last year, the European Union’s antitrust enforcer, the European Commission, investigated Google’s ad business and conclude that a breakup is the only option : “only the mandatory divestment by Google of part of its services would address the concerns.”