Google is on trial against the Department of Justice (DOJ) for allegedly holding a monopoly on digital ad technology. At issue, according to the Justice Department, is that Google acquired several companies including DoubleClick, Invite Media, and AdMeld, which enabled it to become a behemoth in the digital ad space. The question one must ask is — why are we treating this as a crime?
It’s noteworthy that the DOJ specifically cited those three acquisitions as evidence of Google’s monopoly power. Had the DOJ continued to examine the full list of Google’s purchases, its entire case would have been exposed as flawed. The common thread in all three of those acquisitions is that their ad technology proved successful in enhancing Google’s business model. However, as is the case with any large company, not all acquisitions achieve success. One company uniquely aware of this is Google.
In 2011, Google acquired the electronics manufacturer Motorola for $12.5 billion, aiming to strengthen its position in the entry-level smartphone market. Although the purchase yielded valuable patents, Google soon discovered that hardware manufacturing was not its core competency, particularly in the competitive smartphone landscape. Just three years later, Google sold Motorola for less than $3 billion, incurring a significant loss.
This was far from Google’s only failed acquisition. Google also invested $50 million in a ‘question and answer’ service known as Aardvark, which was eventually discontinued. Additionally, it acquired the social gaming company Slide for $180 million, which also met a similar fate. The list goes on – but suffice for now to illustrate that corporate acquisitions often result in costly failures. Google surely employs some of the brightest minds on the planet, but even a company as successful as theirs does not possess a ‘Midas touch.’
This explains one’s justifiable infuriation with the DOJ using taxpayer resources to attack an American business for its successful acquisitions. Google took all of the risks in its failed purchases – and assumed all the financial responsibility for its losses. Concerning DoubleClick, Invite Media, and AdMeld, Google once again took all the risk – and now finds itself in court for its achievements. Whatever concerns one may have over issues of data privacy or alleged censorship from Big Tech companies, one hopes there is common ground in the belief that this lawsuit is un-American.
Finally, one must ask who benefits from any potential breakup of Google’s services (aside from those in government potentially seeking to bolster their political careers). While Google is the leader in online advertising, its competition is no slouch—and is made up of capital-flush companies including Amazon, Microsoft, and Meta. If Google’s acquisitions are key to its success, why would one assume that those companies are incapable of acquiring similarly innovative startups themselves, or that new competition could not emerge from anywhere in the globe?
With potential future innovations in artificial intelligence, augmented reality, and virtual reality, it seems backward looking to assume that the ‘banner ads’ of today, which Google allegedly dominates, will remain the predominant digital ad tech well into the future. The best assumption is they will seem antiquated sooner rather than later. But until such innovations obliterate the current digital advertising model, it’s probably sufficient to say any penalty Google incurs will largely benefit one of the other large Big Tech players.
Why should they be rewarded for the acquisitions they didn’t make?
