Google proposes spin-off of advertising business to defend against new lawsuit: WSJ

CNBC: Sundar Pichai, CEO of Alphabet and Google, is interviewed by Deirdre Bose.


Google offered to spin off some of its advertising business into a separate company under its parent company Alphabet to stave off a second pending antitrust lawsuit from the DOJ. Wall Street Magazine reported on Friday.

Such a concession would keep the advertising business under Alphabet’s umbrella, but would still signify a significant shift in the digital advertising landscape, in which Google is a major player on both sides of the market. While Google is best known for its search engine, main business – internet advertising. Alphabet reported $257 billion in revenue for 2021.

But it is not clear whether this proposal will satisfy the Ministry of Justice.

Antitrust chief Jonathan Kanter has been adamant that he prefers to go to court rather than settle disputes. Kanter said in a speech before the New York State Bar Association’s Antitrust Division in January that the published court decisions are vital to moving the law forward.

“In short, we will seek remedies, not settlements. We cannot compromise if there is a violation of the law,” Kanter. said at the time.

Kanter has been barred from working on Google monopoly investigations while the Justice Department determines whether he should recuse himself based on past work for Google competitors, according to a May report from bloomberg citing unnamed sources. The Justice Department did not confirm the report. But it’s likely that his fellow investigators would have respected his philosophy, if that’s the case.

The Journal reported that a new antitrust lawsuit against Google’s advertising business could be filed as early as this summer, according to sources.

A Justice Department spokesman declined to comment on the CNBC report.

“We are engaging constructively with regulators to address their concerns,” a Google spokesperson said in a statement to CNBC. “As we said before, we have no plans to sell or exit this business and we are deeply committed to delivering value to a wide range of publisher and advertiser partners in a highly competitive sector.”

However, according to the magazine’s report, Google’s proposal involves keeping the ad technology business under the same owner, rather than selling it entirely. The spokesman declined to touch on that particular point.

Created in 2015, Alphabet It is essentially the holding company for Google and generates nearly all of its revenue and profits. Google has always positioned itself as a technology company and has invested in many far-reaching areas of technology such as internet search, phones, artificial intelligence, self-driving cars, and medical technology.

Google has spun off other businesses such as self-driving car company Waymo and life sciences company Verily, leaving them under the Alphabet umbrella.

Google was online advertising market leader for over ten years now. Over the years, the company has created and acquired many advertising technology tools that allow content publishers to earn money from ads and ad buyers to find the audience they want on Google search, YouTube, Maps, and other websites on the Internet.

The new lawsuit will add to the already huge legal challenges Google is facing due to its alleged dominance of several companies.

The Department of Justice has filed a long-awaited antitrust lawsuit against Google in 2020, marking the first major federal antitrust indictment against Google in his home country.

Google is also facing separate lawsuits from large coalitions of state attorneys general, including those led by Texas. approves illegal monopolization online advertising market.

The company has also faced criticism outside the US, especially in Europe, where it has been accused of numerous allegations of competition, including a purchase price comparison service that was confirmed by the European Court of Justice.

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