The DOJ’s antitrust case against Google is ambitious but risky
CEO of Alphabet and Google Sundar Pichai in Warsaw, Poland on March 29, 2022.
Mateusz Wlodarczyk | Nurphoto | Getty Images
The Department of Justice’s latest challenge to Google’s tech empire is an ambitious swing at the company with the potential to rearrange the digital advertising market. But alongside the possibility of great reward comes significant risk in seeking to push the boundaries of antitrust law.
“DOJ is going big or going home here,” said Daniel Francis, who teaches antitrust at NYU School of Law and previously worked as deputy director of the Federal Trade Commission’s Bureau of Competition, where he worked on the agency’s monopoly case against Facebook.
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The DOJ’s antitrust chief Jonathan Kanter has indicated he’s comfortable with taking risks, often saying in public remarks that it’s important to bring cases that seek to challenge current conventions in antitrust law. He said he prefers more permanent remedies like breakups compared to promises to change behavior. That sentiment comes through in the DOJ’s request in its latest lawsuit for the court to force Google to spin off parts of its ad business.
Antitrust experts say the Justice Department paints a compelling story about the ways Google allegedly used acquisitions and exclusionary strategies to fend off rivals and maintain monopoly power in the digital advertising space. It’s one that, if the government gets its way, would break apart a business that’s generated more than $50 billion in revenue for Google in the last quarter, potentially opening up an entire market in which Google is currently one of the most important players.
But, they warn, the government will face significant challenges in proving its case in a court system that progressive antitrust enforcers and many lawmakers believe has taken on a myopic view of the scope of antitrust law, especially when it comes to digital markets.
“If they prove the violations they allege, they’re going to get a remedy that’s going to shake up the market,” said Doug Melamed, a scholar-in-residence at Stanford Law School who served at the Antitrust Division, including as acting assistant attorney general, from 1996-2001 during the landmark case against Microsoft. “But it’s not obvious they’re going to win this case.”
Challenges and strengths
Experts interviewed for this article said the DOJ will face the challenge of charting relatively underexplored areas of antitrust law in proving to the court that Google’s conduct violated the law and harmed competition without benefitting consumers. Though that’s a tall order, it could come with a huge upside if the agency succeeds, possibly expanding the scope of antitrust law for digital monopoly cases to come.
“All antitrust cases are an uphill battle for plaintiffs, thanks to 40 years of case law,” said Rebecca Haw Allensworth, an antitrust professor at Vanderbilt Law School. “This one’s no exception.”
But, Allensworth added, the government’s challenges may be different than those in many other antitrust cases.
“Usually the difficulty, especially in cases involving platforms, is market definition,” she said. In this case, the government argued the relevant market is publisher ad servers, ad exchanges, and advertiser ad networks — the three sides of the advertising stack Google has its hand in, which the DOJ said it’s leveraged to box out rivals. “And here, I think that that is relatively straightforward for the DOJ.”
“One way to look at the latest complaint is that it is the newest and most complete draft of a critique that antitrust agencies in the U.S. and abroad have been building against Google for over a decade,” William Kovacic, who served on the Federal Trade Commission from 2006 to 2011 and is now a professor at George Washington Law, said in an email.
Google, for its part, has said the latest DOJ lawsuit “tries to rewrite history at the expense of publishers, advertisers and internet users.” It claims the government is trying to “pick winners and losers” and that its products have expanded options for publishers and advertisers.
Compared to the DOJ’s earlier lawsuit, which argued Google maintained its monopoly over search services through exclusionary contracts with phone manufacturers, this one advances more nontraditional theories of harm, according to Francis, the NYU Law professor and former FTC official. That also makes it more likely that Google will move to dismiss the case to at least narrow the claims it may have to fight later on — a move it did not take in the earlier suit, he added.
“This case breaks much more new ground and it articulates theories, or it seems to articulate theories, that are right out on the border of what existing antitrust prohibits,” Francis said. “And we’re going to find out, when all is said and done, where the boundaries of digital monopolization really lie.”
High risk, high reward?
CEO of Alphabet and Google Sundar Pichai in Warsaw, Poland on March 29, 2022.
Mateusz Wlodarczyk | Nurphoto | Getty Images
DOJ took a gamble with this case. But if it wins, the rewards could match the risk.
“In terms of the potential impact of the remedy, this could be a bigger case than Microsoft,” said Melamed.
Still, Francis cautioned, a court could order a less disruptive remedy, like paying damages if it finds the government was harmed as an advertising purchaser, or simply requiring Google to stop the allegedly illegal conduct, even if it rules in the DOJ’s favor.
Like all antitrust cases, this one is unlikely to be concluded anytime soon. Still, a key decision by the Justice Department could make it speedier than otherwise expected. The agency filed the case in the Eastern District of Virginia, which has gained a reputation as the “rocket docket” for its relatively efficient pace in moving cases along.
“What that signals to me is that, given the timeframe for antitrust litigation is notoriously slow, DOJ is doing everything that they can in their choice of venue to ensure that this litigation moves forward before technological and commercial changes make it obsolete,” Francis said.
He added that the judge who has been assigned the trial, Clinton appointee Leonie Brinkema, is regarded as smart and fair and has handled antitrust cases before, including one Francis litigated years ago.
“I could imagine that both sides will feel pretty good about having drawn Judge Brinkema as a fair, efficient and sophisticated judge who will move the case along in an expeditious way,” Francis said.
Still, there are hardly any judges who have experience with a case like this one, simply because there haven’t been that many digital monopolization cases decided in court.
“So any judge who would be hearing this case is going to be confronting frontier issues of antitrust theory and principle,” Francis said.
Immediate impact
Outside of the courts, the case could have a more immediate impact in other ways.
“From the point of view of strategy, the case adds a major complication to Google’s defense by increasing the multiplicity and seriousness of public agency antitrust enforcement challenges,” said Kovacic, the former FTC commissioner. “The swarming of enforcement at home and abroad is forcing the company to defend itself in multiple fora in the US and in jurisdictions such as the EU and India.”
Regardless of outcomes, Kovacic said the sheer volume of lawsuits and regulation can create a distraction for top management and will likely lead Google to more carefully consider its actions.
“That can be a serious drag on company performance,” Kovacic wrote.
The suit could also lend credence to lawmakers’ efforts to legislate around digital ad markets. One proposal, the Competition and Transparency in Digital Advertising Act, would prohibit large companies like Google from owning more than one part of the digital advertising system, so it couldn’t own tools on both the buy and sell side as it currently does.
Importantly, the bill is sponsored by Sen. Mike Lee, R-Utah, the ranking member of the Senate Judiciary subcommittee on antitrust. Lee has remained skeptical of some other digital market antitrust reforms, but his leadership on this bill suggests there may be a broader group of Republicans willing to support this kind of measure.
“An antitrust lawsuit is good, but will take a long time and apply to only one company,” Lee tweeted following the DOJ’s announcement, saying he would soon reintroduce the measure. “We need to make sure competition works for everyone, and soon.”
Rep. Ken Buck, R-Colo., who has backed the House version of the bill, called the digital ad legislation “The most important bill we can move forward” in a recent interview with The Washington Post.
“This is clearly the blockbuster case so far from the DOJ antitrust division,” Francis said. “And I think it represents a flagship effort to establish new law on the borders of monopolization doctrine. And at the end of it — win, lose or draw — it’s really going to contribute to our understanding of what the Sherman Act actually prohibits in tech markets.”
Bay Area Rapid Transit (BART) passengers walk off a train at the Richmond station on March 15, 2023 in Richmond, California.
Justin Sullivan | Getty Images
Commuters in and around San Francisco rode into work for free on Tuesday morning due to an outage in the Clipper card system, which is used to handle payments for train, bus and ferry rides.
“ATTENTION: The Clipper system is experiencing an outage on all operators this morning,” the Bay Area Clipper account wrote in a post on X. “Please be prepared to pay your fare with another form of payment if required by your transit agency.”
Many buses were waving commuters on without asking for payment, and at Bay Area Rapid Transit (BART) train stations, the faregates were open, allowing travelers to walk through for free.
Clipper is owned by the Metropolitan Transportation Commission, which manages transportation for the nine-county Bay Area. The service is used by hundreds of thousands of tech workers in San Francisco and Silicon Valley.
The MTC website said there were 1.35 million unique Clipper cards — physical and digital — used in May, the highest monthly toll for the year and the most since December 2019, before the pandemic. A fact sheet from the MTC says Clipper is used by 800,000 transit riders a day across the region.
BART fare gates open on July 1, 2025, due to Clipper outage
Kif Leswing
BART, in particular, has undergone dramatic changes in recent years, most notably installing fare gates starting in late 2023, with full deployment expected to be completed by the end of this year.
In the first five months of the year, average BART station exits totaled between 170,000 and 182,000 a month, according to its website. Those numbers are way down from the pre-pandemic days of 2019, when averages were generally above 400,000 a month.
The MTC has plans to roll out an updated system called Clipper 2.0, which it says will be a “customer-focused, cost-effective fare collection system” with a “flexible platform for future fare structures.” Features include use across the various mobile operating systems, updated communication and “expanded retail, online and mobile sales.”
The update, however, has been routinely delayed, leading to tense confrontations at recent Clipper executive board meetings.
An image of a Quantix drone made by AeroVironment.
David Mcnew | Getty Images News | Getty Images
AeroVironment shares fell 7% Tuesday after the defense contractor said it plans to offer $750 million in common stock and $600 million in convertible senior notes due in 2030 to repay debt.
The drone maker said it would use leftover funding for general purposes such as boosting manufacturing capacity.
AeroVironment shares have soared 85% this year, ballooning its market value to about $13 billion.
Last week, shares of the Arlington, Virginia-based company rallied on strong fourth-quarter results, lifting higher as CNBC’s Jim Cramer called it the “next Palantir of hardware.”
Last month, the company also closed its $4.1 billion acquisition of space-related defense tech company Blue Halo.
Earlier this month, President Donald Trump signed an executive order intended to boost drone production in the U.S. and crack down on unauthorized uses.
The company also has a high short interest level, which may have contributed to some of the recent gains, creating a short squeeze. This phenomenon occurs when a stock price surges, forcing those shorting the stock to purchase shares to cover their positions and prevent losses.
Aerovironment 1 month stock chart
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