Gannett sues Google, Alphabet, says their monopoly on digital ad sales has 'demolished' competition

Gannett, the company that owns USA Today and hundreds of local newspapers, has filed a federal lawsuit against Google that alleges the Big Tech company has a monopoly on the digital ad market.

The publishing company filed the suit Tuesday in a New York federal court, arguing Google and parent company Alphabet controls how publishers buy and sell ads online, which is costing Gannett and other publishers.

“The result is dramatically less revenue for publishers and Google’s ad-tech rivals, while Google enjoys exorbitant monopoly profits,” the lawsuit states.

Papers are still making much of their money off of ad revenue. 

Gannett CEO Mike Reed writes in an op-ed in USA Today that digital advertising is now a $200 billion business – roughly eight-time what it was in 2009. However, he argues, the revenue news publishers has over the same period declined.

"Our lawsuit seeks to restore fair competition in a digital advertising marketplace that Google has demolished," Reed said. "The core of the case and our position is that Google abuses its control over the ad server monopoly to make it increasingly difficult for rival exchanges to run competitive auctions."

This is not the first time Google has been sued for alleged monopolistic control in the online advertising ecosystem.

In January, the Justice Department and eight states reportedly filed an antitrust suit against the tech giant. And in June 2021 the European Union conducted an antitrust investigation to learn whether Google was holding back competition in digital advertising technology.

Reed accused Google of bolstering its own gains at the expense of the newspapers, especially local ones.

"Across the industry," Reed said, "since 2008, newsroom employment has dropped by more than half and 20% of all newspapers have been forced to close. There is less news where it’s needed most while Google thrives from this scheme."

The auction of advertisements that Google purportedly over-controls is explained in the lawsuit as such:

"When an ad server calls for bids to fill an impression, it usually does not call advertisers directly. Rather, the ad server solicits bids from 'ad exchanges,' which organize real-time auctions among participating buyers. Each exchange returns a bid from its winning buyer, and the ad server then chooses the winning exchange."

According to the suit, the Google’s exchange, DoubleClick Ad Exchange ('AdX'), controls over 60% of that market while most of its rivals have market shares in the single digits.

It also argues Google largely prohibits buyers in its exchange from participating in any other exchange.

"With control over the largest ad exchange and ad server – both of which Google acquired rather than developed – Google has carried out a sophisticated, anticompetitive, and deceptive scheme for well over a decade."

Reed says Google made upwards of $30 billion in revenue in 2022 from the sale of ad space on publishers’ websites, which was six times the digital advertising revenue of all U.S. news publications, combined.