Court Ruling Paves the Way for Google Ad Business Breakup Amid Antitrust Battle

A U.S. federal court has found Google engaged in illegal monopolistic practices within the online advertising technology space, a ruling that may compel the tech giant to dismantle its $31 billion ad business. On April 17th, a ruling by District Judge Leonie Brinkema indicated that Google violated antitrust laws within the ad exchange and ad server markets—tools used by sites to sell ad space. Last August, another judge in Washington, D.C., had stated that Google's search engine also constituted an illegal monopoly.

The ruling further criticized Google's practice of illegal "tying," which involved linking access to one product with the purchase of another. Judge Brinkema noted that such exclusionary tactics seriously harmed both Google's publishing clients and the competitive process, ultimately impacting consumers who rely on open web information.

While the court did not fully align with all U.S. Department of Justice complaints, it determined that Google was not monopolizing the advertiser tools market for purchasing display advertising. This suggests the potential restructuring of Google’s parent company, Alphabet, as it faces significant shifts in the competitive dynamics of the ad tech field. Unlike previous tech monopoly cases, the remedy here appears straightforward: namely, splitting Google's ad business.

As the ruling was announced, Alphabet's stock declined by 1.36%, whereas competitors like Trade Desk, Magnite, and PubMatic saw their shares surge, reflecting market sentiment that the decision may redefine the digital advertising industry. The case differs from the Google search engine monopoly case by offering a clear path for resolution through the potential division of Google's ad assets into separate entities focused on ad servers and ad exchanges.

This strategic adjustment would not substantially weaken the company overall. It affects only part of the online advertising market, excluding domains like in-app advertising and streaming platform displays, where Google doesn't have a dominant hold. Notably, the 304 billion revenue for Google's ad network division in 2024 represents only 11% of its total ad revenue, coming largely from advertisements alongside its core products like Search, Gmail, and YouTube.

This lawsuit represents one in a series of antitrust actions initiated by the U.S. government aimed at curbing the power of tech giants. As Google navigates the potential restructuring, it comes under judicial scrutiny similar to that faced by other major players in the tech industry, highlighting an ongoing regulatory push to rein in monopolistic control in digital markets.