By Tae Kim

Though Google was ruled a monopolist for the second time this year in a ruling this week, Baird warns the company's other antitrust case could become a bigger risk to the internet advertising giant.

On Thursday, a federal judge said Google has violated antitrust law through its dominance of two online advertising markets: the open-web display publisher ad server market and the open-web display ad exchange market.

It wasn't a full victory for the U.S. government, as the judge ruled the plaintiffs failed to prove there was a relevant market for "open-web display advertiser ad networks."

"We won half of this case and we will appeal the other half," Lee-Anne Mulholland, Google's regulatory affairs executive, posted on the company's social media account. "We disagree with the Court's decision regarding our publisher tools. Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective."

Baird analyst Colin Sebastian played down the financial impact of the ad technology case, noting that the display ad network business represented a tiny fraction of Alphabet's overall profitability. But the court case does bring to the forefront the risks from Google's other major antitrust trial, which focuses on the company's more important search business.

Alphabet lost that antitrust case last August, in which a federal judge ruled that the company maintained a monopoly in general search services and general text advertising by using exclusive distribution agreements with browser developers, smartphone makers, and wireless carriers. That trial enters the remedies phase this month.

Sebastian said the biggest risk for Alphabet, though not likely, is if the court accepts the Department of Justice's remedy idea to force Google to hand over data access for its search engine to its competitors.

"In our view, this could be a textbook definition of government overreach, and in a 'worst-case scenario', not only would it hand over much of Google's proprietary search capabilities to competitors, but it also risks degrading the quality of Google's search results," he wrote in a note on Thursday.

Last December, Google's Mulholland characterized the DOJ's remedies as something that "would harm American consumers and undermine America's global technology leadership" by "requiring us to share people's private search queries with foreign and domestic rivals, and restricting our ability to innovate and improve our products."

Baird expects a remedy decision by August.

Write to Tae Kim at tae.kim@barrons.com

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April 18, 2025 13:32 ET (17:32 GMT)

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