The court ruled that Google's advertising business is an illegal monopoly, facing the risk of divestiture for its $31 billion advertising business

A U.S. federal court ruled that Google has partially engaged in illegal monopolization in the online advertising technology sector, a decision that could force the tech giant to split its $31 billion advertising business.

On April 17, Eastern Time, media reported that U.S. District Judge Leonie Brinkema ruled that Google violated antitrust laws in two markets: advertising exchange platforms and ad servers (the tools websites use to sell ad space). Last August, Washington D.C. District Judge Amit Mehta ruled that Google's dominant search engine constituted illegal monopolization.

In her written ruling, the judge noted that the company also engaged in illegal "tying" practices—linking access to one product with the purchase of another. Judge Brinkema wrote:

In addition to depriving competitors of the ability to compete, this exclusionary behavior severely harms Google's publisher customers, the competitive process, and ultimately consumers of open web information.

However, the court did not fully support all of the Department of Justice's legal claims, concluding that Google does not meet the definition of monopolization in the market for tools used by advertisers to purchase display ads.

For investors, this means that Google's parent company Alphabet may face business restructuring in the future, and the competitive landscape in the advertising technology sector will undergo a complete transformation. Unlike previous tech monopolization cases, the remedies in this case are relatively clear: splitting Google's advertising business.

As of the time of writing, Alphabet's stock price fell by 1.36%, while its competitors Trade Desk, Magnite, and PubMatic saw significant stock price increases, indicating that the market believes this ruling could reshape the digital advertising industry.

Clear Remedy: Splitting Google's Advertising Business

Unlike the Google search engine monopolization case, this advertising technology case has a clearer remedy.

Reports suggest that the most direct solution is to split Google's advertising business: separating the ad server side from the ad exchange side, effectively cutting it in half and divesting.

This measure would not weaken the company's overall strength. The case only involves a portion of the entire online advertising market, which includes in-app ads and ads displayed on streaming platforms, where Google does not hold a dominant position.

Most of Google's advertising revenue comes from ads displayed alongside its own products (such as Search, Gmail, and YouTube). In 2024, the revenue from Google's ad network division (the part involved in this case) is projected to be $30.4 billion, accounting for only 11% of Google's total advertising revenue.

Tech Giants Face Regulatory Backlash

This case is the latest example of the U.S. government's series of antitrust actions against tech giants.

Media reports indicate that the Trump administration is continuing efforts initiated during former President Biden's and Trump's first terms to curb the power of large tech companies The Federal Trade Commission is currently reviewing an antitrust case against Facebook's parent company, Meta Platforms, with CEO Mark Zuckerberg testifying for several days. The Federal Trade Commission seeks to break up Meta's business, forcing the company to separate from Instagram and WhatsApp.

Analysts say that if Meta also loses its antitrust lawsuit, "the digital advertising landscape could change dramatically within 5 years," which could be a positive signal for market competition.

Apple is facing an antitrust lawsuit filed by the Department of Justice, accusing it of hindering the integration of external software with its devices, locking users into its ecosystem. The Federal Trade Commission's case against Amazon is also set to be heard in September