In a big win, Google won’t have to break up its ad tech business, court rules

A federal judge ruled Wednesday that Google must make changes to deal with its ad technology monopoly, but would not have to break up the business as the company fended off the most extreme measures to limit its power.

Judge Leonie M. Brinkema, who sits in the U.S. District Court for the Eastern District of Virginia, issued her sealed ruling after finding last year that Google broke the law to protect its dominance over the largely invisible system of technologies that place ads on pages around the web. The sentence was preliminarily presented in a short order published by the court.

The Justice Department asked Google to sell parts of its business, which it said was necessary to control the company’s power. But the judge refused to grant the request. Instead, it ordered Google to change its business practices in favor of competitors, although it did not provide details.

The decision ensures that Google’s power over the internet remains largely unchanged as it moves to dominate a technological era defined by artificial intelligence. Despite two federal court rulings in major government lawsuits declaring the tech giant a monopolist — the second in the crosshairs — the judges have not ordered significant structural changes to its $4.1 trillion business.

Instead, Google has pushed forward and established itself in the AI ​​race against younger competitors such as OpenAI and Anthropic. It has woven the technology into its products, including its signature finder, and poured billions of dollars into building the data centers that power the technology.

Judge Brinkem’s decision is another sign that the federal government’s attempts to rein in the power of the biggest tech companies have failed. After another judge found Google to have an illegal monopoly on its search business, the company’s critics called its remedies weak.

Last year, the Federal Trade Commission lost a case alleging that Meta created a personal social networking monopoly by acquiring its upstart rivals Instagram and WhatsApp. Federal antitrust lawsuits against Amazon and Apple are expected to go to trial in the coming years.

“I think this will be the end of the era of the US trying to break the platforms of this complex,” said Nikhil Lai, principal analyst at Forrester. “Courts are still hesitant to dismantle these really complex technological systems even when they find anti-competitive behavior.”

Judge Brinkema’s decision to force Google to enforce some remedies is likely to have limited impact on the tech giant’s business overall, analysts said.

Google’s ad technology business brought in $30 billion last year, or about 8 percent of parent company Alphabet’s revenue. Its ad tech revenue has fallen for 16 straight quarters, and analysts estimate it accounts for less than 1 percent of the company’s profit.

As Google focuses more on its own ads and AI-generated search summaries, ad technology will become even less relevant, said Richard Kramer, principal analyst at investment advisory firm Arete Research.

“This is nobody’s business,” he said before sentencing.

“We are very pleased that the court rejected the Justice Department’s proposal to unbundle tools that help small businesses reach new customers and grow,” said Lee-Anne Mulholland, vice president of regulatory affairs at Google.

A Justice Department spokesman said in a statement that its antitrust division was “pleased that the court has ordered significant relief” in the case and that it is “evaluating appropriate next steps.”

Government Sues Ad Tech — USA et al. v. Google – in 2023 through a complex network of programs that sell advertising space on the web, such as on a news site or recipe page. The software suite that includes Google Ad Manager conducts split-second auctions to place ads every time a user loads a web page.

The Justice Department’s lawsuit accused the company of having a monopoly on every part of that system: the service publishers used to host ad space, the software advertisers use to bid on that space, and the technology that connects the two sides of the transaction.

Government lawyers argued at the three-week trial in 2024 that Google’s dominance allowed the company to take a bigger cut of each ad sale than would be possible in the open market. Google has countered that it doesn’t have a monopoly because its advertising business competes with ad sales on apps like TikTok and connected TVs.

Google’s lawyers also argued that the government’s case ran afoul of two Supreme Court precedents from decades past. One from 2004 stated that monopolists are not obliged to deal with their competitors. In 2018, the Supreme Court ruled that courts must treat “two-sided” markets differently in antitrust cases.

Judge Brinkema agreed with the government that Google has a monopoly on the tools used by publishers and the technology that connects those publishers to advertisers. But according to her, the government failed to prove that Google violated the law when it comes to the tools used by advertisers.

Her decision, which Google has said it plans to appeal, sparked hearings last year on how best to fix the company’s monopoly.

For more than two weeks, government lawyers have argued that just breaking up Google’s ad technology would be enough. They asked Judge Brinke to force Google to sell software that facilitates transactions between buyers and sellers of ad space, known as an ad exchange.

They also demanded that Google be forced to disclose the computer code that powers its publisher tools, and that the judge reserve the right to let Google sell the rest of those tools if competition doesn’t improve. The government said the breakup could be accompanied by changes to Google’s practices, including requiring it not to favor its own products in ad auctions and doing more to link its tools with competing ad technology programs.

Google said the judge shouldn’t break up the company and should instead just force it to change its behavior. That would include changing policies that publishers say have cemented the company’s dominance of ad tech and sharing more information with publishers about how ad auctions work.

The company argued that the breakup would take too much time. It would also threaten small publishers who rely on Google’s scale and customer service to sell ads on their sites, the company said.

Judge Brinkema said she approved “most” of the changes to Google’s business practices proposed by the Justice Department and the company, “as modified by this court.” She said she refused the government’s request that Google release the source code for its ad auctions.

The judge gave both sides up to 14 days to request that confidential information be removed from her sealed decision. The judgment will then be published.

Kate Conger contributed reporting from San Francisco.