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Alphabet : Google Subpoenaed for Details on its Ad Business

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09/12/2019 | 01:47pm EST

By John D. McKinnon

WASHINGTON -- The probe into Alphabet Inc.'s Google unit by a coalition of state attorneys general is zeroing in on the search company's dominant presence in the digital advertising market, according to a civil subpoena reviewed Thursday.

The subpoena, sent by Texas Attorney General Ken Paxton, includes more than 200 questions and demands for records. Many of the questions appear designed to solicit evidence that Google engaged in anticompetitive conduct in building up its powerful position.

For instance, the subpoena asks for information about Google's "business rationale" for acquiring several of the companies that have helped it build up its advertising business, including DoubleClick in 2008, AdMob in 2010 and Admeld Inc. in 2011.

Another question asks Google to explain its business justification for prohibiting rival data-management platforms from operating on its own ad networks.

Still another asks Google to explain its "control or influence over" the AMP Project, an open-source initiative to standardize mobile website design. Google is also asked to explain its "business justification for removing YouTube [advertising] inventory from other Ad Exchanges."

Asked for a response, Google referred to a blog post by Kent Walker, its senior vice president for global affairs, last week.

"We have answered many questions on these issues over many years, in the United States as well as overseas, across many aspects of our business, so this is not new for us," Mr. Walker wrote on Friday. "The [Justice Department] has asked us to provide information about these past investigations, and we expect state attorneys general will ask similar questions. We have always worked constructively with regulators and we will continue to do so."

In another blog post this week, the company said competition in the ad space is robust.

"To suggest that the ad tech sector is lacking competition is simply not true," it said. "To the contrary, the industry is famously crowded. There are thousands of companies, large and small, working together and in competition with each other to power digital advertising across the web, each with different specialties and technologies."

This year, Google's share of the total U.S. digital ad market will be 37%, according to eMarketer, a research firm.

The subpoena was sent Monday, the same day that 50 attorneys general announced their antitrust investigation that is being led by Texas. The Wall Street Journal reviewed a copy Thursday through a public records request.

While Google has pledged to cooperate with the probe, some legal observers believe Google could feel compelled to start fighting back at some point if it believes the investigation is overreaching. When Mississippi's attorney general, Jim Hood, sent a broad civil investigative demand to Google a few years ago, the company responded with a federal lawsuit seeking to quash the effort.

Eric Goldman, a Santa Clara University law professor and co-director of the High Tech Law Institute, cited that lawsuit as "an example of Google's willingness to fight if it feels it has to."

Scott Cleland, founder of Precursor Research LLC, an independent investment research boutique specializing in internet regulation, said: "Google has no peer in slow-rolling and minimizing government accountability with a smile; it's a core competency."

Write to John D. McKinnon at john.mckinnon@wsj.com

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