US Judge Rejects Google Ad Business Breakup

Alphabet-owned Google has avoided a forced breakup of its digital advertising technology business after a US federal judge rejected a key demand from antitrust regulators.

US District Judge Leonie Brinkema, sitting in Alexandria, Virginia, ruled on Wednesday that Google will not be required to sell AdX, its advertising exchange where publishers use Google's platform to auction advertising space. Google typically charges publishers a fee for transactions conducted through the system.

The US Department of Justice (DOJ) had argued that Google could not be trusted to continue operating the advertising exchange after Brinkema previously found that the company had illegally restricted competition in the online advertising market.

Instead of ordering a sale of AdX, Brinkema approved behavioural measures requiring Google to change certain business practices.

The judge's detailed reasoning has not yet been released. Her opinion was filed under seal for 14 days, meaning the specific requirements imposed on Google will remain confidential until the document is made public.

The court has given Google and the government 30 days to jointly submit a proposed final judgment.

The case centred on Google's advertising technology "stack", which consists of tools used by website publishers to sell advertising and by advertisers to purchase ad space.

Brinkema ruled previously that Google had deliberately established monopolies in both the publisher ad-server and advertising-exchange markets. She also found that the company had unlawfully tied the two services together.

Google has indicated it intends to appeal that underlying ruling.

Government lawyers argued that Google had gained excessive control over the digital advertising market by operating multiple parts of the system at the same time. The company owns technology used by publishers to sell advertising, operates an exchange where those transactions take place and benefits from substantial advertiser demand.

The DOJ had sought the sale of AdX and wanted Google to make key elements of its advertising auction technology available as open-source software.

Google strongly opposed those proposals, describing them as excessive government intervention that could hurt publishers, advertisers and consumers. The company also argued that separating the technology would be technically impractical.

AdX represents only a relatively small portion of Google's overall business.

Google shares gave up some of their earlier gains following the ruling but remained around 0.6 percent higher.

Google welcomed the decision, with executive Lee-Anne Mulholland saying the company was pleased the court had rejected the DOJ's proposal to dismantle tools used by small businesses to attract new customers.

The DOJ, meanwhile, said it was pleased that the court had imposed what it described as substantial remedies.

The department said it was now assessing its next steps as it seeks to increase competition in the online advertising industry.

US Big Tech Breakup Efforts Face Setbacks

Although Google has been ordered to alter some of its business practices, the decision represents another setback for US regulators seeking to force major technology companies to sell off significant businesses.

It is the third consecutive case in which US antitrust authorities have sought a Big Tech breakup and failed to secure such an order.

Sacha Haworth, executive director of the Tech Oversight Project, said the decisions demonstrated that courts alone may not be enough to curb the power of major technology companies. The organisation has backed proposed legislation intended to strengthen competition in digital markets.

The Federal Trade Commission last year also failed to convince a federal judge in Washington to force Meta Platforms to sell Instagram and WhatsApp.

In that case, the judge found that the FTC had not demonstrated that Meta maintained a monopoly in social media, noting that the market had changed significantly since the agency first launched the case in 2020. The FTC has appealed the ruling.

Google has faced another major antitrust setback over its search business.

A Washington judge who ruled that Google illegally monopolised online search also rejected a DOJ proposal requiring the company to sell its Chrome browser. The court pointed to increasing competition from generative artificial intelligence services, including OpenAI's ChatGPT.

The latest ruling means Google will retain control of its advertising exchange, although the company will face restrictions on how it operates parts of its ad technology business.