The Texas Attorney General has announced new antitrust charges against Google, highlighting the company’s ad technology practices.
In a bizarre video posted to the firm’s verified Twitter account, Texas AG Ken Paxton says the company “repeatedly used its monopolistic power to control prices” in online advertisements. “These actions harm every person in America,” continued Paxton. “It’s not fair that Google can harm the web pages you visit and read.”
#BREAK: Texas takes the lead again! Today we are filing a lawsuit against #Google for anti-competitive behavior.
This internet goliath used its power to manipulate the market, destroy competition and harm YOU, the consumer. Stay tuned… pic.twitter.com/fdEVEWQb0e
– Texas Attorney General (@TXAG) December 16, 2020
The complaint specifically addresses Google’s historical requirements for publishers, whether limited to a single exchange or licensing fees for using Google ad servers.
The most detailed claim is that Google has used its market power to sabotage header bidding, a practice that allows advertisers to send a single request through multiple exchanges at once. “Google considered promoting real competition via header a major threat,” the complaint said, citing internal communications obtained as part of the investigation.
Google eventually adopted the practice, allowing its ad server to route requests through multiple exchanges at once. But according to the complaint, Google manipulated that system to send requests to its own exchange, even when a competitor made a higher offer. Google would have code-named this attempt after a character from the Star Wars movies, although the specific character was redacted in the application.
Eight other Republican-led states have joined the lawsuit, including Missouri, Kentucky and Indiana. Some cooperating states have reportedly left the lawsuit after several Paxton employees accused him of accepting bribes, sparking a wider crisis within the state office. More recently, Paxton’s office has hired private law firms working specifically on the Google case.
Since the complaint has not appeared in official documents, it is also unclear what specific costs Google will face. Paxton’s office did not respond to a request for clarification. The agency’s preliminary investigation largely examined Google’s dominance in the online advertising market, particularly its recent ad technology acquisitions, so the case is expected to follow suit.
Google was approached for comment, denying the claim that digital ad markets are suffering from consolidation, citing recent price declines and fees. “Attorney General Paxton’s claims are worthless, but despite all the facts, he has gone ahead,” said a company representative. “Digital ad prices have fallen over the past decade. The costs for advertising technology are also falling. Google’s ad technology costs are lower than the industry average. These are the hallmarks of a highly competitive industry.
Today’s case ties in with a number of parallel antitrust cases being filed against the technology giant. In October, the Justice Department filed antitrust charges specifically targeting Google’s contracts with companies like Apple and Mozilla to maintain its dominance in search. Texas has also joined that case as a co-plaintiff.
A third case, led by the Colorado Attorney General, was also about to be filed. The Colorado case would focus on how Google’s search engine design has disadvantaged rivals such as Yelp and Genius, who also offer competing information services. A recent Politics report said a complaint could be filed “as soon as Thursday,” citing two people close to the probe.
4:00 p.m. ET: Updated with the official complaint filed against Google, with clarifications throughout.