What just happened? Google will have to make parts of its ad-tech systems work with rival products and give publishers more information about its ad auctions under a federal court order unsealed Wednesday. However, the order does not require Google to sell any part of its advertising technology business, a significant victory for the company after the Justice Department pushed for a breakup.
US District Judge Leonie M. Brinkema concluded that divestiture was "neither realistic nor needed," even after finding last year that Google had violated antitrust law in its handling of the ad-tech market. Instead, the ruling calls for changes to how Google's advertising tools operate. Google must make its products interoperable with competing technologies, share additional auction data with publishers and appoint an internal monitor to oversee compliance.
The remedies are aimed at Google's role in the market for ads sold on third-party websites. Publishers use ad-tech platforms to sell space on pages such as news, recipe, and entertainment sites. Google operates tools used at several stages of that process, including systems that help publishers sell inventory and systems that run auctions as webpages load.
The Justice Department argued that Google used that position to protect its market control and take a larger share of ad sales than it could in a more competitive system. Brinkema agreed last year that Google had illegally maintained its monopoly in parts of the ad-tech business.
The new order is designed to give publishers more information about auction activity and make it easier for competing ad platforms to work with Google's technology. The court said the remedies largely reflected proposals offered by both Google and the Justice Department.
Google had argued in May that it could not separate its ad exchange business from the rest of its ad-tech operations because the products are tightly integrated. Instead, the company proposed steps such as greater pricing transparency and oversight by a trustee.
Lee-Anne Mulholland, Google's global head of regulatory affairs, said the company was "very pleased the court rejected the DOJ's proposal to break apart tools that help small businesses reach new customers and grow."
The Justice Department said it was reviewing the decision. Associate Attorney General Stanley E. Woodward Jr. called it "a significant victory" for the department's effort to restore competition.
Some publishers and ad-tech executives said the ruling should have gone further. Jason Kint, chief executive of Digital Content Next, said the court had stopped short of a breakup after finding that Google had illegally monopolized and tied together several parts of the digital advertising market.
"Google has an extraordinary ability to manipulate markets and turn constraints to its advantage," Kint told The New York Times.
Nikhil Lai, a principal analyst at Forrester, said the decision reflects courts' general reluctance to break up large companies. Instead, he said, judges often favor measures that could give rivals a better chance to compete.
"Innovation might need to be the more competitive force than litigation," Lai said.
The ruling comes as Alphabet continues to spend heavily on artificial intelligence, particularly in search and other major products. Brinkema wrote that AI has not yet reshaped ad technology to the same degree it has affected search. But she said a lengthy effort to dismantle Google's business could be overtaken by "imminent industry disruptions caused by AI."
Google's ad-tech business produced $30 billion in revenue last year, about 8% of Alphabet's revenue. Revenue in the unit has fallen for 16 straight quarters, and analysts estimate it represents less than 1% of Alphabet's profit.
The decision is Google's second major antitrust remedy victory. Federal judges have found the company to be a monopolist in both search and advertising technology, but neither case has resulted in an order to split up its business.