Texas and nine other U.S. states sue Google for abusing market power

WASHINGTON, Dec 16 (Reuters) – Texas, backed by nine other states, filed a lawsuit against Alphabet Inc-owned Google on Wednesday, accusing it of breaking antitrust law in how it runs its online advertising business.

The Texas lawsuit is the second major complaint from regulators against Google and the fourth in a series of federal and state lawsuits aimed at reining in alleged bad behavior by the big tech platforms that have grown significantly in the past two decades. The lawsuit was filed in the Eastern District of Texas.

Texas Attorney General Ken Paxton had previously joined the U.S. Justice Department’s lawsuit against the company in October, which accused the $1 trillion California-based company of illegally using its market power to hobble rivals, and was joined by 11 other states when it was filed.

In its lawsuit, Texas argues that Google dominates the path of getting an advertisement from the agency that produces it to a Web page or mobile app that attracts the consumer’s eyeballs.

“Google repeatedly used its monopolistic power to control pricing (and) engage in market collusions to rig auctions in a tremendous violation of justice,” Paxton said in a Facebook video.

The company “eliminated its competition and crowned itself the king of online advertising,” he added.

“We will strongly defend ourselves from his baseless claims in court,” a Google spokeswoman said, referring to Paxton. “Digital ad prices have fallen over the last decade. Ad tech fees are falling too. Google’s ad tech fees are lower than the industry average. These are the hallmarks of a highly competitive industry.”

The nine states that joined Texas are Arkansas, Indiana, Kentucky, Missouri, Mississippi, South Dakota, North Dakota, Utah and Idaho.

The complaint filed in the Eastern District of Texas was not immediately available to download, delaying publication of some of the lawsuit’s details.

Google ad sales account for over 80% of Alphabet’s revenue. But most of the sales and the bulk of Alphabet’s profits come from Google’s high-margin operation of placing text ads above search results.

The business targeted by Texas and the other states – placing ads on partner apps and websites – matters far less to Google.

Alphabet reported digital advertising revenue of $37.1 billion in its latest quarterly report. The company’s shares were down 0.35% late on Wednesday afternoon.