Google is offering to spinoff its adtech unit to avert a possible federal antitrust lawsuit.
However, the suggested would only move the division to parent company Alphabet — not sell it off entirely, The Wall Street Journal reports. The adtech unit could be worth more than $200 billion, depending on what assets are involved.
However, the government may not view this as a significant enough difference. Justice Department antitrust officials appear more interested in substantive structural changes to the unit.
Google’s offer is the latest development related to the government’s long-running investigation into allegations the company is exploiting its position as broker and auctioneer of digital advertising. The Justice Department is said to be preparing a lawsuit charging the internet giant with anti-competitive practices over its adtech.
“We have been engaging constructively with regulators to address their concerns,” a Google spokesman said in a statement to the Journal. “As we’ve said before, we have no plans to sell or exit this business.” He added: “Rigorous competition in ad technology has made online ads more relevant, reduced fees, and expanded options for publishers and advertisers.”
The adtech unit is drawing fire from many different governments, both in the U.S. and abroad. Multiple U.S. states have filed a joint lawsuit charging the company with running a monopoly which harms ad-industry competitors and publishers. It is also the subject of investigations in the European Union and the United Kingdom. Additionally, a bill before the Senate would force Google, Facebook and Apple to divest their adtech businesses.
“The conflicts of interest are so glaring that one Google employee described Google’s ad business as being like ‘if Goldman or Citibank owned the NYSE,’” Sen. Mike Lee (R-UT, one of the bill’s sponsors, said.
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This is the second time the government has gone after Google for anti-competitive activities. In an ongoing suit first filed two years ago the Justice Department charged the company with using illegal tactics to maintain a monopoly for its flagship search engine and related advertising business.
Why we care. Monopolies are bad for business. That’s an obvious fact and one each generation must relearn. They stifle innovation, destroy markets and fleece the consumer. They are also a natural tendency of all businesses. A flourishing economy requires strong anti-monopoly laws and enforcement.