Senate Panel to Examine Claims Google Monopolizes Online Advertising

September 15, 2020 Updated: September 15, 2020

A Senate subcommittee continued its investigation Tuesday of recurring claims that Google, the $1 trillion Silicon Valley hi-tech giant, is monopolizing the digital advertising market, driving up costs to businesses and consumers alike.

“Online advertising is an incredibly complex business, and one that touches every single person on the internet,” Sen. Mike Lee (R-Utah) said at the opening of the hearing of the Senate Judiciary Committee’s Subcommittee on Anti-trust, Competition and Consumer Rights.

Online advertising equals more than $162 billion annually and is growing rapidly as older media formats, including print and broadcast television, lose audiences and marketing value.

Tuesday’s hearing comes amid growing bipartisan concerns in Congress that Google and other digital tech giants like Apple, Microsoft, and Amazon are so huge and have acquired such power through the internet that anti-trust laws originally conceived and passed in the 19th Century are no longer able to ensure competitive markets and consumer choice.

The Department of Justice (DOJ) is also reportedly conducting an extensive investigation focused on anti-trust concerns about Google’s commanding position in the digital ad market.

Earlier this year, Rep. David Cicilline (D-R.I.) told a House subcommittee hearing that he believes the tech giants have become too powerful.

“Whether they control access to information or to a marketplace, these platforms have the incentive and ability to exploit this power. They can charge exorbitant fees, impose oppressive contracts, and extract valuable data from the people and businesses that rely on them,” Cicilline said.

Lee opened Tuesday’s Senate hearing by noting the rapid expansion of internet advertising and publishing in the past decade.

“The technologies involved in connecting advertisers and publishers have evolved rapidly in the last decade, and the expansion of online advertising has facilitated an explosion of online content by allowing even the smallest website owners to monetize their content. Small and local businesses have also benefited from being able to quickly and easily promote their businesses,” Lee continued.

“At the same time, this growth and expansion has been largely consolidated onto a single platform: Google’s online ad business. As that business has grown, so too have complaints that Google — which both operates the ad selling and buying platforms, and sells its own inventory through those platforms — has conflicts of interest and has manipulated or rigged online ad technologies and auctions to favor its own interest and protect its market share.

“Whether this is true or not matters because so many businesses depend upon digital advertising to market their products or monetize their content. Web users, in turn, benefit both from free online content and being connected to relevant businesses in a way that helps them make optimal economic choices,” Lee added.

Google officials insist that digital advertising is an intensely competitive market, thanks to the immense marketing power of rivals like Facebook and Amazon.

But a recent study for the British government estimated that Google receives from 40 to 90 percent of the revenues generated at the five levels of the process by digital ad sales. Congressional aides believe the results of the UK study closely mirror those of the United States.

Sen. Amy Klobuchar (D-Minn.), the subcommittee’s ranking minority member, sounded similar concerns in her opening statement, saying “we aren’t having this hearing today because Google is successful, we are having it because even successful companies are subject to the law, including the anti-trust law.”

The Minnesota Democrat noted that “the five tech giants were collectively worth 25 percent of the entire value of the Fortune 500 a couple of weeks ago.”

Klobuchar said she supports reviewing existing anti-trust law to ensure that it is able “to match our situation. At what point do you cross the line to stifle competition and innovation?”

Klobuchar alluded to the UK study in pointing out that Google dominates each level of what is known in the digital industry as the “advertising stack,” beginning with publishers selling advertising space among the content on their sites, to the advertisers seeking to create and sell ads.

Don Harrison, Google’s President for Global Partnerships and Corporate Development, was scheduled to appear before the panel during the hearing.

Contact Mark Tapscott at Mark.Tapscott@epochtimes.nyc