Google's monopoly ruling: Is it a turning point for digital advertising?

Yesterday, a US judge ruled in a landmark decision that Alphabet's Google acted illegally to maintain a monopoly on online search and advertising. Here is how this ruling (and similar ones) may impact advertising recommendations in the future.

Background:

As the leading advertising platform for search and display, Google collects an unparalleled amount of user data. This data is extraordinarily valuable, providing critical insights to Alphabet that enhance Google’s performance while offering a powerful product that Alphabet can sell to global advertisers. One way that Google defends its leading position is by paying billions of dollars to the likes of Apple, Samsung, and Mozilla each year to create exclusive agreements to pre-install Google as the default search engine across smartphones and browsers. This act secures Google’s access to a steady stream of user data that helps maintain its hold on the market.

Decision summary:

In response to these actions, prosecutors argued that potential competitors had no opportunity or resources to compete meaningfully with these agreements. The court's ruling found that Google abused its dominance in the search engine market to stifle competition and maintain its monopoly over online advertising. This case is not the first time Alphabet has been to court for these allegations; it was fined billions for similar charges in Europe.

Counter argument:

Alphabet’s lawyers argued that its practices were designed to improve the overall user experience of the platform. They claim that Google still faces intense competition from search engines such as Microsoft's Bing and specialised sites that are used to find restaurants, flights, and other services. Additionally, the company argued here—and in Europe—that its investment in technology has supported competition by driving industry growth.

Decision impact on advertisers:

This decision is expected to lead to significant changes in how digital advertising operates, with a potential ripple effect on other emerging platforms such as generative AI. It is unclear yet what penalties Google and Alphabet will face due to the decision, which will be decided in a future hearing. One possibility is "structural relief" which means the government could force the company's breakup.

This decision introduces a new era of opportunity and uncertainty.

• Opportunity will stem from a competitive market that will drive down advertising costs.

• Uncertainty will come from a transition period leading to disruptions while the industry adjusts to new regulations.

Amid the trend of Big Tech antitrust:

This decision follows a trend of antitrust scrutiny brought against Big Tech players. Regulators worldwide are growing more vigilant about more stringent regulatory frameworks, particularly concerning the use of personal data and healthy competition.

This year, the European Parliament passed the EU AI Act on 13th March, which is considered by some to be the new “gold standard” for AI regulation. In June, the US Senate released its AI roadmap, focussing on investment and promoting innovation. Unsurprisingly, many argued in the US that the roadmap was written like the author was a tech lobbyist.

In the past, I have written about how the US tends to promote tech innovation over civil rights concerning personal data when compared to the EU. Yesterday’s decision – following the EU’s similar case in 2022 – reinforces the idea that the US is more reactive in regulating Big Tech than its European counterparts. This is an idea that is only compounded when we look at the GDPR – which went into effect in 2018 – in comparison to the CCPA – which went into effect in 2020.

Over the last year, we have seen Google shift its business to adjust to industry changes too. Following the release of its Search Generative Experience (SGE) playbook last year and its Search Doc “leak” in March 2024, Google has shared a blueprint for how content creators can help the platform succeed in AI. It makes us wonder what Google’s AI product would look like if the company did, in fact, experience “structural relief.”

Immediate actions:  

• Begin to diversify advertising spend and channel selection to incorporate new formats and platforms

• Develop SEO strategies that are more comprehensive of innovation and emerging technologies

• Stay informed on regulatory developments in partnership with employing agile methodologies allowing teams to adapt to new market conditions quickly.

The future of tech is exciting as regulators create an environment for more innovation and competition. Court rulings, such as this one, are often appealed and can take a while to impact our day-to-day work. Yet, we should anticipate tech companies to initiate changes during this interim period in preparation. As a result, staying agile and informed allows us to take advantage of new opportunities to promote innovation and creativity in our external communications and marketing.