By Sheila Dang and Diane Bartz
A landmark lawsuit by the US Justice Department against Alphabet’s Google over its dominance of advertising technology could help rivals and websites that sell ad space, but leaves an uncertain future for the advertisers themselves, experts say.
The Justice Department's complaint against Google on Tuesday called for the company to divest Google Ad Manager, a suite of tools including one that lets websites put ad space up for a sale and another that served as an ad marketplace that automatically matched advertisers with those publishers.
If the Justice Department lawsuit succeeds, “advertisers and publishers could have more leverage with more options with expanding players – and consequently, more competition,” said Neil Begley, of Moody's Investors Service.
Apple Inc, which was steadily growing its nascent advertising business and promoting it as privacy-focused, could be a winner if Google ads became less effective, said Brian Mandelbaum, the chief executive of ad tech company Attain.
Ad industry executives say Google's business in placing ads on websites it does not own gives Google valuable information on an ad’s effectiveness.
Apple had “an ability to be a new dominant force”, in advertising because Apple had data through its ownership of phones, its Safari web browser and the distribution of apps through the App Store, Mandelbaum said.
Google's competitors in ad tech are increasingly creating products that served the publishers like news websites, which sold ad space, and advertisers who bought ads, like Google did, said Paul Bannister, the chief strategy officer at CafeMedia, which helps small and medium-sized publishers sell ad space.
If Google were forced to divest the tools that serve publishers, it would benefit competitors like Xandr, which is owned by Microsoft, that would work with both sides of the ad-buying ecosystem, Bannister said.
With more options besides Google, publishers would have more transparency over how much they could sell ad space for, and could end up paying less in fees, Mandelbaum said.
If successful, the lawsuit could be “the beginning of serious business model changes for Google“, said Paul Gallant, the managing director at Cowen Washington Research Group.
The divested assets could result in Google losing key data that helped target ads to relevant consumers, he said.
If Google lost access to data signals, advertisers could see their Google ads become less effective, said Nikhil Lai, a senior analyst at research firm Forrester.
At least twice before, the government has filed lawsuits against dominant companies, with far-reaching results. A lawsuit breaking up AT&T, filed in 1974, resulted in an agreement in 1982 to break up the company. The breakup has been credited with a host of innovations in telephony.
The Justice Department’s lawsuit against Microsoft, filed in 1998, reined in the company at a time when it was seeking to extend its dominant operating system to the internet browser. While the lawsuit settled, the fight is credited with opening the way for other internet innovators, like Google itself.
Reuters