April 17 (Reuters) – A U.S. judge ruled that Google, owned by Alphabet Inc., has unlawfully maintained dominance in two key digital advertising markets, marking a major legal setback for the tech giant. The ruling could open the door for the U.S. government to demand the breakup of parts of Google’s advertising business. Judge Leonie Brinkema, presiding in Alexandria, Virginia, concluded that Google intentionally gained and held monopoly power in the markets for publisher ad servers and ad exchanges—platforms that connect advertisers with publishers. The judgment sets the stage for a future hearing to determine how Google must restore market competition, which could involve selling off parts of its ad business. This marks the second time a court has declared Google a monopolist, following a previous verdict related to its online search dominance.

Publisher ad servers help websites manage digital ad inventory, and ad exchanges are platforms where ads are bought and sold. These technologies are crucial revenue sources for online publishers, whom Judge Brinkema noted were negatively impacted by Google's anticompetitive practices. She stated that Google’s conduct not only blocked rivals from fairly competing but also harmed its publisher clients, distorted market competition, and ultimately hurt consumers who rely on the open web for information.

However, the court did not find Google guilty of monopolizing the advertiser ad network market, a separate claim brought by the government. U.S. Attorney General Pamela Bondi praised the ruling, calling it a "landmark victory" and reaffirmed the DOJ’s commitment to combating monopolistic behavior by large tech companies. Google’s VP of regulatory affairs, Lee-Anne Mulholland, said the company plans to appeal the decision, maintaining that Google’s ad tools remain popular due to their simplicity and effectiveness.

Following the ruling, Google's stock fell 1.4%. Analysts believe that even if Google loses the case, the financial impact may be limited. Still, the DOJ insists Google should be required to sell off its Google Ad Manager, which includes its ad server and exchange. Reuters had previously reported that Google had considered selling its ad exchange to satisfy European regulators. U.S. Senator Amy Klobuchar applauded the decision, calling it a win for consumers, small businesses, and digital creators, with potential to foster innovation and reduce prices in the digital ad market.

Michael Ashley Schulman, CIO at Running Point Capital, described the ruling as a pivotal moment for the tech industry, showing that U.S. courts are now more open to imposing strong antitrust remedies, such as forced divestitures. This could raise regulatory concerns for other tech giants like Amazon and Meta, who operate in similar integrated markets.

Meta is currently facing its own antitrust trial over alleged dominance in social networking, while Amazon and Apple are also under fire for monopolistic practices in retail and smartphones, respectively. These lawsuits have seen bipartisan support across multiple U.S. administrations. Google is now facing the possibility of two courts ordering major changes to its operations. Another trial next week will decide whether it must divest assets like its Chrome browser to reduce its search engine monopoly.

At a prior trial last year, prosecutors accused Google of using standard monopoly tactics, including buying out rivals, locking in customers, and controlling transaction mechanisms in the online ad space. Google countered by arguing that it had improved compatibility with competitors’ tools and that new market dynamics, like app-based and streaming ad spending, have introduced more competition. Although Judge Brinkema dismissed the claims related to acquisitions, she ruled that Google unfairly tied the use of its ad server to its exchange product and implemented practices that were not in the best interest of its publisher clients.

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