Google's Online Ads Monopoly Conundrum: All You Need To Know

There are serious concerns about Google's alleged monopolistic command over the online advertisement market. Legal battles are being fought over the search engine's seemingly unfair and lucrative business of online advertisements.

Google, which kicked off just as a search engine in the late 1990s, has now grown to also become one of the largest online spaces for advertisements. It came up with AdWords, now known as Google Ads, back in 2000. A tool that transformed the search engine's ball game.

Google Ads enabled relevant advertisements to show up online, matching the user's interests. This then, ended up drawing more attention and clicks, which in turn tempted businesses to bid for more advertisement space on Google because optimised advertisements boosted visibility and fuelled revenue. 

Eventually, this increased both Google's share in the online advertisement market and the individual revenue the search engine made from these advertisements.

According to Statista, in 2023, Google's total revenue summed up to $305 billion, of which advertisements alone—at $238 billion—contributed 77% to the total share.

But, if this is compared with one of Google's prominent competitors like Microsoft, the gap can simply not be ignored.

Microsoft reported a revenue of $212 billion in 2023, of which advertisements contributed only $12.2 billion. This indicated that advertisements pitched in just 5.75% to the total revenue chunk of the company, against a massive 77% in the case of Google. 

In January last year, the US Justice Department sued Google for allegedly monopolising digital advertising technologies. Currently, Google is fighting an online advertisement trial in the United States. The allegation majorly is unfair dominance in the online search and advertising space.

The Washington Post reported recently that prosecutors allege that Google had been able to manipulate the online ad market by buying out rivals until it was the go-to representative for both the buyers and sellers of ads, acting like a "real-estate agent representing both parties in a home sale".

Google has already lost two antitrust battles in a year. One, where the Federal court ruled that Google maintains an illegal monopoly over online search. And the other where a jury in San Francisco declared Google Play an illegal monopoly in a separate case brought by Epic Games.

But the US is not just the only country upset with the search engine giant. Bloomberg reported that Google lost its bid to topple a once-record €2.4 billion European Union fine for abusing its monopoly power to crush rival shopping services.

The search engine giant has called the allegations "wrong on the facts" and expressed before the court in Virginia that "success is not illegal". Lee-Anne Mulholland, Google’s vice president for regulatory affairs, said in a blog post, that the Justice Department is "picking winners and losers in a highly competitive industry".

"The DOJ's narrow view of the ad tech market doesn't reflect reality. We are one of hundreds of companies who actively compete to enable the placement of ads across the internet," the blog post stated.

She also wrote that Google's ad tech fees are actually lower than reported industry averages—hardly a sign of monopoly abuse.

In the on-going case in the Court of Virginia, Google's lead attorney said in her opening statement that the company pushed the sector forward through its investments in research and development and that it faces a wide field of competitors like Microsoft and Disney, the Washington Post reported.

Approximately 99,000 search queries are processed by Google every second, resulting in about 8.5 billion searches daily and roughly 2 trillion global searches annually, according to seo.ai.

And according to Statista, in December 2023, the search platform generated approximately 84.2 billion visits.

If Google is found guilty of breaking the law and engaging in unfair practices, it can have a significant impact on the billions of Google users across the world.