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DOJ files second antitrust suit against Google, seeks to break up its ad business

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The U.S. Justice Department on Tuesday filed its second antitrust lawsuit against Google in just over two years. It’s the latest sign that the U.S. government is not backing down from cases against tech firms even in light of a mixed record in court on antitrust suits.

Google shares were down 1.3% Tuesday afternoon.

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This lawsuit, which is focused on Google’s online advertising business and seeks to make Google divest parts of the business, is the first against the company filed under the Biden administration. The Department’s earlier lawsuit, filed in October 2020 under the Trump administration, accused Google of using its alleged monopoly power to cut off competition for internet search through exclusionary agreements. That case is expected to go to trial in September.

Google’s advertising business generated $54.5 billion in the quarter ended Sept. 30 from Search, YouTube, Google Network ads and other advertising.

Google also faces three other antitrust lawsuits from large groups of state attorneys general, including one focused on its advertising business led by Texas Attorney General Ken Paxton.

The states of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia joined DOJ in the latest lawsuit.

Google’s advertising business has drawn critics because the platform operates on multiple sides of the market — buying, selling and an ad exchange — giving it unique insight into the process and potential leverage. The company has long denied that it dominates the online advertising market, pointing to the market share of competitors including Meta’s Facebook.

In its lawsuit, the Justice Department and the states argue that Google sought to control all sides of the market, realizing “it could become ‘the be-all, and end-all location for all ad serving.’”

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“Google would no longer have to compete on the merits; it could simply set the rules of the game to exclude rivals,” they allege.

According to the complaint, even one of Google’s own advertising executives questioned the wisdom of Google’s broad ownership in the space.

“[I]s there a deeper issue with us owning the platform, the exchange, and a huge network?” the executive allegedly asked. “The analogy would be if Goldman or Citibank owned the NYSE.”

The harm of Google’s practices, they allege, is that “website creators earn less, and advertisers pay more, than they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative ad tech tools that would ultimately result in higher quality and lower cost transactions for market participants.”

As a result, they added, more publishers are forced to turn to alternative models like subscriptions to fund their operations.

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Another part of Google’s strategy, the complaint alleges, was to acquire other companies to grow its power in the advertising market and “set the stage for Google’s later exclusionary conduct across the ad tech industry.” Those acquisitions included a 2008 purchase of publisher ad server DoubleClick and and a “nascent ad exchange” that would become Google’s AdX. This allowed Google to require publishers in some instances to use all of its tools to gain access to any one, rather than working with rival tools for parts of the online ad-buying process.

“In effect, Google was robbing from Peter (the advertisers) to pay Paul (the publishers), all the while collecting a hefty transaction fee for its own privileged position in the middle,” the enforcers allege. “Rather than helping to fund website publishing, Google was siphoning off advertising dollars for itself through the imposition of supra-competitive fees on its platforms. A rival publisher ad server could not compete with Google’s inflated ad prices, especially without access to Google’s captive advertiser demand from Google Ads.”

Google continued to identify potential threats to its dominance, the complaint alleges, like when yield management tools became available to help publishers find better prices for their inventory in real-time outside of Google’s ecosystem.

“So, in response, Google employed a familiar tactic: acquire, then extinguish, any competitive threat,” the complainants wrote, pointing to Google’s 2011 acquisition of yield manager AdMeld. Following the deal, they allege, Google changed its AdX contracts to bar publishers from using other platforms forcing its own exchange to compete with others in real time.

Later, Google became aware of another attempted workaround called “header bidding,” where publishers could add code to their own websites to let non-Google ad exchanges bid for inventory before Google’s ad exchange preferences were triggered, letting ad exchange rivals back into the market in a significant way. Google executives allegedly described the practice as an “existential threat.”

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As a result, Google marketed its own “Open Bidding” tool as an alternative, which the complaint called a “Trojan Horse.” Publishers and ad exchanges that participated in the program had to give Google visibility into their auctions, including rival exchange bids. That allowed Google’s ad exchange to retain “a guaranteed seat in every auction, regardless of whether Google’s ad exchange offers the best match between advertisers and publishers,” the complaint alleges.

Google also feared ad competition from Facebook and Amazon, the DOJ and states allege, and in response, it agreed with Facebook to give it “preferential Open Bidding auction terms … in exchange for spend and pricing commitments designed to push more of Facebook’s captive advertiser spend onto Google’s platforms.” The complaint alleges Google sought a similar arrangement with Amazon but wasn’t so successful.

“Today’s lawsuit from the DOJ attempts to pick winners and losers in the highly competitive advertising technology sector,” a Google spokesperson said in a statement. “It largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was recently dismissed by a federal court. DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.”

The DOJ Antitrust Division’s progressive chief, Jonathan Kanter, had recently been cleared to work on Google-related matters, The Wall Street Journal reported earlier this month. Bloomberg had previously reported that Kanter was not permitted to work on issues involving the company while the Department evaluated Google’s request to review his grounds for recusal. Before his time in government, Kanter represented some of Google’s rivals and critics, including Yelp and News Corp.

A Google spokesperson said in a statement last year that Kanter’s prior work and statements “raise serious concerns about his ability to be impartial.”

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Google is far from the only tech giant that has seen scrutiny from the federal government. At the Federal Trade Commission, Meta is also the subject of two antitrust suits, as is Microsoft’s proposed acquisition of Activision.

Google and other tech companies have also faced increasing scrutiny from abroad, particularly in Europe, where Google has also fought multiple competition cases and new regulations threaten major changes to tech business models.

The company reports earnings on Feb. 2.

This story is developing. Check back for updates.

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WATCH: Google faces fast and furious pace of lawsuits as antitrust scrutiny intensifies



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Twitter Blue users can now write 4,000-character tweets

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Twitter on Thursday announced that Blue subscribers in the US can now post long tweets of up to 4,000 characters on the micro-blogging platform. Also Read – Airtel 5G Plus is now available in four cities in Himachal Pradesh: Check availability here

The company posted from its @TwitterBlue account: “Starting today, if you’re subscribed to Twitter Blue in the US you can create longer tweets. Also Read – HMD Global teases launch of Nokia X30 in India, but how is PM Modi involved?

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“Most standard functions of Tweeting still apply, whether you want to post a picture, use a hashtag, or create a poll. But now you can type all the way up to 4,000 characters.” Also Read – Realme GT 3 global launch confirmed, India launch signaled

However, for now, longer tweets on the web cannot be saved as drafts or scheduled to be sent later.

“We know longer tweets could mean a lot of scrolling, so they’ll be capped at 280 characters on your timeline and you’ll see a ‘Show more’ prompt to click and read the whole tweet,” it added.

Only Blue subscribers can post longer Tweets, but non-subscribers can read, reply, retweet, and quote Tweet to them.

Moreover, Blue users will be able to reply and quote a longer tweet with up to 4,000 characters, the platform mentioned.

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Earlier, tweets were limited to only 280 characters, which still applies to non-subscribers.

–IANS



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Google Bard flubs answer in ad. That mistake cost Google billions

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Alphabet Inc lost $100 billion in market value on Wednesday after its new chatbot shared inaccurate information in a promotional video and a company event failed to dazzle, feeding worries that the Google parent is losing ground to rival Microsoft Corp. Also Read – Google’s VP of labs, Salesforce’s former co-CEO to form AI company

Alphabet shares slid as much as 9 percent during regular trading with volumes nearly three times the 50-day moving average. They pared losses after hours and were roughly flat. The stock had lost 40 percent of its value last year but rallied 15 percent since the beginning of this year, excluding Wednesday’s losses. Also Read – Microsoft Bing gets an even powerful language model than ChatGPT, Edge browser gets AI features

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Reuters was first to point out an error in Google’s advertisement for chatbot Bard, which debuted on Monday, about which satellite first took pictures of a planet outside the Earth’s solar system. Also Read – Microsoft surprise event today: Is ChatGPT powered Bing search finally releasing?

Google has been on its heels after OpenAI, a startup Microsoft is backing with around $10 billion, introduced software in November that has wowed consumers and become a fixation in Silicon Valley circles for its surprisingly accurate and well-written answers to simple prompts.

Google’s live-streamed presentation on Wednesday morning did not include details about how and when it would integrate Bard into its core search function. A day earlier, Microsoft held an event touting that it had already released to the public a version of its Bing search with ChatGPT functions integrated.

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Bard’s error was discovered just before the presentation by Google, based in Mountain View, California.

“While Google has been a leader in AI innovation over the last several years, they seemed to have fallen asleep on implementing this technology into their search product,” said Gil Luria, senior software analyst at D.A. Davidson. “Google has been scrambling over the last few weeks to catch up on Search and that caused the announcement yesterday (Tuesday) to be rushed and the embarrassing mess up of posting a wrong answer during their demo.”

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Microsoft shares rose around 3 percent on Wednesday and were flat in post-market trading.

Alphabet posted a short GIF video of Bard in action via Twitter, promising it would help simplify complex topics, but it instead delivered an inaccurate answer.

In the advertisement, Bard is given the prompt: “What new discoveries from the James Webb Space Telescope (JWST) can I tell my 9-year-old about?” Bard responds with a number of answers, including one suggesting the JWST was used to take the very first pictures of a planet outside the Earth’s solar system, or exoplanets. The first pictures of exoplanets were, however, taken by the European Southern Observatory’s Very Large Telescope (VLT) in 2004, as confirmed by NASA.

“This highlights the importance of a rigorous testing process, something that we’re kicking off this week with our Trusted Tester program,” a Google spokesperson said. “We’ll combine external feedback with our own internal testing to make sure Bard’s responses meet a high bar for quality, safety and groundedness in real-world information.”

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Formidable competitor

Alphabet is coming off a disappointing fourth quarter as advertisers cut spending.

The search and advertising giant is moving quickly to keep pace with OpenAI and rivals, reportedly bringing in founders Sergey Brin and Larry Page to accelerate its efforts.

“People are starting to question is Microsoft going to be a formidable competitor now against Google’s really bread-and-butter business,” said King Lip, chief strategist at Baker Avenue Wealth Management, which owns Alphabet and Microsoft shares.

Lip cautioned, though, that concerns about Alphabet may be overblown, saying: “I think still Bing is a far, far cry away from Google’s search capabilities.”

The new ChatGPT software has injected excitement into technology firms after tens of thousands of job cuts in recent weeks and executive pledges to pare back on so-called moonshot projects. AI has become a fixation for tech executives who have mentioned it as much as six times more often on recent earnings calls than in prior quarters, Reuters found.

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The appeal of AI-driven search is that it could spit out results in plain language, rather than in a list of links, which could make browsing faster and more efficient. It remains unclear what impact that might have on targeted advertising, the backbone of search engines like Google.

Chatbot AI systems also carry risks for corporations because of inherent biases in their algorithms that can skew results, sexualize images or even plagiarise, as consumers testing the service have discovered. Microsoft, for instance, released a chatbot on Twitter in 2016 that quickly began generating racist content before being shut down. And an AI used by the news site CNET was found to produce factually incorrect or plagiarized stories.

At the time of writing, the Bard ad had been viewed on Twitter more than a million times.

— Reuters

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Tech layoffs: Disney CEO announces to fire 7,000 employees

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Entertainment giant Disney is laying off 7,000 employees to cut costs, its CEO Bob Iger has announced. During the company’s earnings call for its December quarter, he said the move is “necessary to address the challenges we’re facing today”. Also Read – Zoom fires 1,300 employees, CEO takes 98 percent pay cut

Disney to lay off 7,000 employees

“I do not make this decision lightly. I have enormous respect and appreciation for the talent and dedication of our employees worldwide and I am mindful of the personal impact of these changes,” said Iger. Also Read – How to watch Black Panther: Wakanda Forever online

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On the content side, Disney expects to deliver approximately $3 billion in savings over the next few years, excluding sports. Also Read – Airtel introduces Disney Plus Hotstar subscription for three prepaid plans

He said that under the strategic reorganisation, there will be three core business segments: Disney Entertainment, ESPN and Disney Parks, Experiences and Products.

“This reorganisation will result in a more cost-effective, coordinated and streamlined approach to our operations and we are committed to running our businesses more efficiently, especially in a challenging economic environment. In that regard, we are targeting $5.5 billion of cost savings across the company,” said the CEO.

The company’s streaming business lost around $1.5 billion last quarter.

Its current forecasts indicate Disney+ will hit profitability by the end of fiscal 2024.

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Disney Plus added just 200,000 subscribers in the US and Canada for a total of 46.6 million, while its international offering (excluding HotStar) saw the addition of 1.2 million members.

Disney’s direct-to-consumer division, which includes its streaming services, saw a 13 percent increase in revenue to $5.3 billion, with an operating loss of nearly $1.1 billion.

–IANS

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