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Tech giants including Meta Platforms, Amazon, and Apple are also being grilled for their acquisition of smaller rivals in a bid to squash out competition.
The United States Department of Justice (DoJ) is reportedly finalizing plans to file a new lawsuit against Google and its parent company, Alphabet Inc (NASDAQ: GOOGL). The news was first reported by Bloomberg which said the suit is on track to be filed as early as this week according to anonymous sources close to the probes.
The regulator is allegedly digging into the tech giant’s dominance in the advertising sector, invoking another anti-competitive crackdown that once plagued the dominant tech giants in the United States.
Google is the online search unit of Alphabet Inc which maintains dominance over other related search engines including Microsoft’s Bing. The outfit makes about 80% of its revenue from digital advertising, an industry that is valued at more than $278 billion in the United States alone. Google allegedly controls the majority of the technology that is used to serve advertisers and users as well as maintain dominance on Google PlayStore.
The global ad tech ecosystem is worth over $626 billion and Google’s dominance is beyond just the United States. While the regulators have found faults with the company’s dominance, Google has always argued that the market is quite competitive and that it has to fight for market share with the likes of Meta Platforms Inc (NASDAQ: META), Amazon.com Inc (NASDAQ: AMZN) and Microsoft Corporation (NASDAQ: MSFT).
Google’s ad business connects advertisers with publishers in a highly customized way such that only the right target audience is reached. With the sophistication of the firm’s ad business, it is expected to make as much as $73.8 billion this 2023 fiscal year, a humongous capital base that is notably bigger than the market cap of some competitors like social media platform, Twitter Inc.
Recurring Antitrust Lawsuits on Google
This current lawsuit filed against Google by the Department of Justice has positioned Alphabet Inc as the firm that has come into the crosshairs of federal prosecutors the most considering its previous antitrust lawsuit is set to go on trial this September.
The previous lawsuit was filed back in 2020 under Attorney General William Barr in relation to its search engine business. The regulator posited that Google was squashing competitors with its algorithm. In addition, the DoJ claimed Google used exclusive distribution deals with wireless carriers and phone makers to lock out competition.
Tech giants including Meta Platforms, Amazon, and Apple are also being grilled for their acquisition of smaller rivals in a bid to squash out competition. Meta Platforms’ acquisition of Instagram and Apple’s Store policies are some of the salient issues being reviewed by regulators.
The multi-billion mega acquisition of gaming publisher Activision Blizzard Inc (NASDAQ: ATVI) by Microsoft was also placed on anticompetitive review as American regulators are pushing to maintain a free and healthy market for all stakeholders.