Google Faces Potential Ad Business Split As DOJ Pushes For AdX, DFP Divestiture

On Monday, the U.S. Department of Justice proposed that Google, owned by Alphabet Inc. GOOG GOOGL, be required to divest two major components of its advertising empire: the AdX advertising exchange and the DoubleClick for Publishers (DFP) ad server.

What Happened: The request follows a ruling by a federal judge who found that Google maintains an illegal monopoly over key technologies used by publishers to manage and sell online advertising space, reported Reuters.

A trial on potential remedies is set to begin in September. In court filings, the DOJ argued that breaking up Google's ad-tech stack is necessary to restore healthy competition and level the playing field in the online advertising ecosystem.

Google pushed back on the proposal, with Lee-Anne Mulholland, the company's vice president of Regulatory Affairs, calling the DOJ's demands extreme.

"The DOJ’s additional proposals to force a divestiture of our ad tech tools go well beyond the Court’s findings, have no basis in law, and would harm publishers and advertisers," she said in a statement to the publication.

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Why It's Important: AdX is a platform that enables real-time bidding for ad space, while DFP helps publishers manage where and how ads appear on their sites.

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Together, these technologies enable news organizations and online content platforms to generate revenue by selling digital ads, the report said.

In 2023, Google attempted to resolve a separate antitrust probe by the EU by offering to sell AdX, but the proposal was dismissed by European publishers as inadequate.

In a separate lawsuit, the Department of Justice has suggested that Google sell off its Chrome browser and end payments to partners for making Google the default search engine.

Alphabet posted first-quarter revenue of $90.23 billion, marking a 12% increase from the same period last year. The figure surpassed the Street consensus estimate of $89.2 billion. Revenue from Google's advertising business totaled $66.9 billion, exceeding the $61.7 billion reported in the previous year.

Price Action: In the pre-market trading on Tuesday, Alphabet Inc.'s Class A shares declined by 1.09%, while Class C shares decreased by 1.08%, according to Benzinga Pro.

Alphabet currently holds a growth score of 66.11% based on Benzinga Edge Stock Rankings. Click here to see how it stacks up against other companies.

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