Texas and nine other states have jointly filed a new multi-state lawsuit against Google, accusing the company of abusing its “monopolistic power” to destroy competition in the online advertising technology market. In a video announcing the suit on Wednesday, Texas Attorney General (AG) Ken Paxton said that Google repeatedly used its power to “control pricing” of ads.
“They manipulate the advertising auction, and they continually, illegally profit” from it, Paxton said. “This goliath of a company is using its power to manipulate the market, destroy competition, and harm you, the consumer. These actions harm every person in America.”
Calling Google’s actions “unfair” to both consumers as well as rival companies, the Texas AG said that it’s time for the big tech companies “to learn the hard way.”
This internet Goliath used its power to manipulate the market, destroy competition, and harm YOU, the consumer. Stay tuned… pic.twitter.com/fdEVEWQb0e
— Texas Attorney General (@TXAG) December 16, 2020Advertisement
Texas leads the lawsuit against Google over anti-competitive advertising technology practices
According to the official complaint, Google sought to kill competition in the advertising market through an array of exclusionary tactics. The company apparently reached an unlawful agreement with Facebook to manipulate advertising auctions, the complaint cites Google’s own internal documents.
It offered Facebook more information, speed, and other advantages in the advertising auctions in exchange for the social network giant curtailing its involvement with header bidding, a practice that publishers devised in an attempt to reinject competition in the marketplace. Header bidding allowed advertisers to route ad inventory to multiple neutral exchanges at once. This would return the highest bid for the inventory and also helped advertisers optimize the purchase of inventory through the most cost-effective exchanges.
However, this system also bypassed Google’s stranglehold in the market. The mountain View company viewed header bidding’s promotion of genuine competition as a major threat. And in order to stifle its effects, Google adopted a series of anticompetitive tactics. It initially let publishers use its ad server to route their inventory to more than one exchange at a time. However, the complaint alleges, the company rigged the system to let its own exchange win, even when another exchange submitted a higher bid.
Texas AG Ken Paxton says Google is trading on “insider information by acting as the pitcher, batter, and umpire” simultaneously. He wants to put an end to this. He has found support from nine more states in this fight against Google. Arkansas, Idaho, Indiana, Kentucky, Mississippi, Missouri, North Dakota, South Dakota, and Utah have all joined the lawsuit.
Texas is also one of the plaintiffs of the Department of Justice’s lawsuit against Google. Filed in October, that case focuses on the tech giant’s dominance in internet search and advertising. Dozen of other states have joined that case as a co-plaintiff.