On Tuesday, the largest US newspaper chain and publisher of USA Today – Gannett, sued the search engine giant Google for allegedly establishing its monopoly over at technology and cornering the remaining markets for online advertising.
In a complaint lodged at Manhattan federal court, Gannett accused Google of acquiring control over tools for purchasing and selling online ads which in turn, pushes publishers to sell more cheap ad space to the Alphabet Inc subsidiary.
According to Gannett, this move enable Google to gain “exorbitant monopoly profits” as well as it leads to “dramatically less revenue” for publishers and it’s competitors in the advertisement industry.
Gannett Chief Executive Mike Reed said in an opinion published in USA today, “digital advertising is the life blood of the online economy. Without free and fair competition for digital ad space, publishers cannot invest in their newsroom.”
Vice President of Google ads – Dan Taylor – said in a statement “these claims are simply wrong.“ Moreover he added that publishers have various options for advertising technology, and “keep the vast majority of revenue“ when they use Google.
Gannett – which has more than 200 daily newspapers, said that it wants “very substantial“ actual, punitive and triple damages. The lawsuit filed by the company puts legal pressure on Mountain View, which is a California-based alphabet, and is already at loggerheads with regulators in two different continents.
European Union filed a similar lawsuit earlier this month, demanding Google to sell a part of its ad technology due to dismiss the lawsuit.
On June 14, Brussels had accused Google of exploiting its dominant position in the advertising tech sector. It’s written that the charges can only be resolved if the search engine giant agreed to sell part of its business. This was the first time when such a move has been demanded by the EU – the breakup of a big tech company. Throughout the years of anti-trust enforcement Google has been fined for billions of euros.
Five months ago, the US Department of justice brought in its own lawsuit against Google – which is now joined by 17 US states. Another group of states headed by Texas also sued the company. The department announced similar allegations directed towards the company claiming that it had embarked on a – a “systematic campaign“ to gain monopoly and control over the digital tech ad market. Like the European Union, USA also highlighted what it found was the tech giant’s “pervasive conflict of interest”.
Last year, the tech giants recorded $224.5 billion of advertising revenue – making for nearly 80% of Alphabet’s total revenue and a major fraction of Alphabet’s $60 billion profit.
Revenue from advertising helps Google to offer various services for free, such as– email, android and a large part of its YouTube platform.
Slightly different from the previous year, Google’s first-quarter advertisement revenue this year was $54.5 billion.
Like many of its counterparts such as McLean, Virginia-based Gannet also had to struggle with failing ad revenue as approximately 86% of Americans now read news online.
Gannett reported that digital advertising is a 200 billion business and has increased eightfold since 2009 but on the other hand, the newspaper ad revenue fell drastically 70% throughout this time.
The company also informed that the print circulation at its newspapers plummeted by 20% in 2020 and 2021, and since then onwards, it had to shut over 170 publications since 2019 – when it had a merger with Gatehouse media. On Tuesday, the newspaper companies shares plummeted one cents at $1.86 and they have plunged 70% since the merger.
Plays a significant role in each step of the process for buying and selling advertising on the open internet and this enables its exorbitant advantages on pricing for services determent in ad exchanges that connect publishers with advertisers.
