U.S. lawsuit against Google could benefit Apple and others

By Sheila Dang and Diane Bartz

Jan 26 (Reuters) – A landmark lawsuit by the U.S.
Justice Department against Alphabet’s Google over its
dominance of advertising technology could help rivals and
websites that sell ad space, but leaves an uncertain future for
the advertisers themselves, experts told Reuters.

The Justice Department’s complaint against Google on Tuesday
called for the company to divest Google Ad Manager, a suite of
tools including one that lets websites put ad space up for a
sale and another that served as an ad marketplace that
automatically matched advertisers with those publishers.

If the Justice Department lawsuit succeeds, “advertisers and
publishers could have more leverage with more options with
expanding players – and consequently more competition,” said
Neil Begley of Moody’s Investors Service.

Apple Inc, which is steadily growing its nascent
advertising business and promoting it as privacy-focused, could
be a winner if Google ads become less effective, said Brian
Mandelbaum, chief executive of ad tech company Attain.

Ad industry executives say Google’s business in placing ads
on websites it does not own gives Google valuable information on
an ad’s effectiveness.

Apple has “an ability to be a new dominant force,” in
advertising because Apple has data through its ownership of
phones, its Safari web browser and the distribution of apps
through the App Store, he said.

Google’s competitors in ad tech are increasingly creating
products that serve both the publishers like news websites,
which sell ad space, and advertisers who buy ads, like Google
currently does, said Paul Bannister, chief strategy officer at
CafeMedia, which helps small and medium-sized publishers sell ad
space.

If Google is forced to divest the tools that serve
publishers, it would benefit competitors like Xandr, which is
owned by Microsoft, that will still work with both
sides of the ad-buying ecosystem, Bannister said.

With more options besides Google, publishers will have more
transparency over how much they can sell ad space for, and could
end up paying less in fees, Mandelbaum said.

If successful, the lawsuit could be “the beginning of
serious business model changes for Google,” said Paul Gallant,
managing director at Cowen Washington Research Group.

The divested assets could result in Google losing key data
that helps target ads to relevant consumers, he said.

If Google loses access to data signals, advertisers could
see their Google ads become less effective, said Nikhil Lai,
senior analyst at research firm Forrester.

At least twice before, the government has filed lawsuits
against dominant companies with far-reaching results. A lawsuit
breaking up AT&T, filed in 1974, resulted in an agreement in
1982 to break up the company. That breakup has been credited
with a host of innovations in telephony.

The Justice Department’s lawsuit against Microsoft, filed in
1998, reined in the company at a time when it was seeking to
extend its dominant operating system to the internet browser.
While the lawsuit settled, the fight is credited with opening
the way for other internet innovators, like Google itself.

(Reporting by Sheila Dang and Diane Bartz
Editing by Nick Zieminski)