Google’s second antitrust trial begins Monday. Here’s what’s at stake.

For the second time in a year, Google (GOOG, GOOGL) will go to trial against the US Department of Justice to defend its profitable business.

Starting Monday, prosecutors and lawyers for Google are scheduled to make opening arguments in federal court in Alexandria, Va., in a case that claims Google illegally maintained its dominance in three markets in the ecosystem that automates online advertising.

The case, to be decided by US District Court Judge Leonie Brinkema, a Clinton appointee, was brought in January 2023 by the Biden administration’s Justice Department, along with 17 state attorneys general.

“The stakes for both sides are very high,” said New York University School of Law professor Eleanor Fox.

The lawsuit comes just a month after Google suffered a defeat in a high-stakes federal antitrust case brought by the DOJ during former President Donald Trump’s administration. In that case, Judge Amit Mehta of the U.S. District Court for the District of Columbia ruled that Google had unlawfully monopolized the general online search engine market and the market for text advertising in search engines.

Google said it would appeal the decision.

In the case of ad technology, the government alleged that Google also implemented illegal methods to monopolize the publishing markets of ad servers, ad exchanges and advertisers’ ad networks. Together, these marketplaces enable advertisers to buy and publishers to sell digital advertising online.

At the heart of the government’s case are allegations that Google locked out competitors by leveraging its well-known search engine to enter the online advertising market and then bought competitors in that space.

First in 2000, they said, Google launched Google Ads, formerly known as AdWords, a platform that allows advertisers to buy advertising space on Google’s own web pages, including those that display Internet search results. Later that year, Google created another tool for advertisers to buy ad space on third-party websites.

Prosecutors say Google then created a “moat” around the entire ad tech industry by developing a separate ad server for publishers. Once it had control of both parts of the industry, they argued, Google positioned itself to extract profit as an intermediary.

When Google’s own ad platforms failed to gain traction, the DOJ said, it turned to buying rivals.

In 2008, Google acquired the leading ad server for publishers, DoubleClick, for $3 billion, as well as an ad exchange auction platform, AdX.

According to the DOJ, Google then blocked publishers who did not use both its publisher platform, DoubleClick for Publishers, and the ad exchange from accessing real-time ad demand exclusive to Google Ads.

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“In effect, Google has positioned itself to operate simultaneously as a buyer, seller and auctioneer of digital advertising,” the complaint says.

Cornell Law School antitrust professor Erik Hovenkamp said the allegations in the complaint are serious and compelling, with no obvious justifications that could excuse the alleged misconduct.

“As far as advertisers and publishers are concerned, they are the primary victims of Google’s alleged wrongdoing,” Hovenkamp said.

Google did not respond to Yahoo Finance’s request for comment. In his response to the lawsuit, he criticized the DOJ and the states for using antitrust law to try to derail acquisitions that federal regulators had already approved.

“Advertisers and publishers choose Google’s ad technology products because of their quality and Google’s commitment to constant innovation and improvement, not because they have no other options or are forced to,” Google’s filing said.

In the absence of Google’s anticompetitive behavior, prosecutors say website owners would earn more from hosting ads and advertisers would pay less to secure ad space.

These financial pressures, they said, are driving website owners to turn to subscriptions, paywalls or alternative forms of monetization.

It’s unclear how much of Google’s revenue is at risk in the case.

Wedbush analyst Dan Ives said in a note Thursday that Google’s collection of ad tech products generated $20 billion in gross revenue and just over $1 billion in operating profit in 2020. The figure represented 11 percent of Alphabet’s consolidated gross revenues that year. Ives estimated that technologies probably now generate about 8 percent of Google’s gross revenue.

At the time of the complaint, the DOJ said digital display ads generated more than $20 billion in revenue for U.S. publishers. About 5 trillion digital display ads are sold by publishers each year. And for every dollar that passes from advertisers to website publishers through its ad tech tools, Google keeps 30% or more.

Hovenkamp disagrees with speculation that the DOJ’s recent victory over Google will help the government in its ad tech case, anticipating that it will have little influence on the decision.

“If you compare the future Google case with the previous one, both the practices and the markets are different. There is no overlap,” he said.

However, Fox points out that the DOJ will be able to use many parts of Judge Mehta’s opinion to support claims about Google’s market power and alleged abuse. At the same time, she said, Google is expected to leave no stone unturned to try to show that the ad tech markets are competitive and still growing.

“I think the DOJ has a strong case for Google’s monopoly power,” she said, adding that she finds particularly strong the government’s claims that Google abused its power in the ad exchange market.

If Google is found liable for violating antitrust law, the DOJ has proposed that the company be required to divest businesses of its suite of ad tech products.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed

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