Antitrust Suit Targets Google's Ad Rates: What You Need To Know

  • Alphabet Inc's GOOG GOOGL Google takes a cut of 22% - 42% of U.S. ad spending that goes via its systems, according to a newly unredacted lawsuit by state attorneys general, the Wall Street Journal reports.
  • The Texas-led suit alleges that Google charges 2-4x for advertising transactions on its exchange versus rival digital advertising exchanges.
  • “[T]he analogy would be if Goldman Sachs Group Inc GS or Citigroup Inc C Citibank owned the NYSE [New York Stock Exchange],” one senior Google employee said, the suit alleged.
  • Google denied the allegations.
  • The lawsuit alleged Google deploying strategies to “lock-in” publishers and advertisers and help the company’s ad-buying tools win over 80% of auctions on its exchange. 
  • Google officially served 75% of all online ad impressions in the U.S. during Q3 of 2018.
  • The suit cited programs, with code names like Bell, Elmo and Poirot, helping Google generate over $1 billion in sales.
  • The lawsuit alleged that Google’s business practices inflated advertising costs and passed them on to consumers in higher-priced products. 
  • The lawsuit alleged that Google crushed competition from rival exchanges and restricted websites’ options for ad delivery.
  • Price Action: GOOG shares traded lower by 2.88% at $2,773.50 on the last check Friday.
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