Happy anniversary: US Justice Dept prepares suit against Google

Google shares plunged 5.5 per cent on the NASDAQ today on reports of an unwelcome 10th anniversary present: a pending US government lawsuit.

A Wall Street Journal report says the Justice Department has been deposing witnesses and issuing subpoenas for documents that could support a suit against Google’s recent online advertising alliance with Yahoo (widely seen as a device to thwart Microsoft’s attempted merger with Yahoo). Together, Google and Yahoo control around 80 per cent of the online advertising market in the US, with Microsoft’s online ad initiative, Ad Center, relegated to the low teens.

Justice’s hiring of Sanford Litvack, the Justice Department antitrust head under the Carter administration, is also seen as a sign that action against the 10-year-old Google could be imminent – but with commentators split over whether a suit would be confined to the Yahoo deal, expand to include the search giant’s acquisition of dominant online ad server DoubleClick; or canvas Google’s broader activities, which now include TV, radio and print ad broking alongside its imposing position online.

Apparently undeterred, Google today announced a new advertising alliance with US network NBC Universal. Under the multiyear deal, the two companies will develop Google’s TV Ads platform into a technology that’s user-friendly and attractive to local TV stations.

As with its nascent radio and print business, Google currently buys blocks of air time, which it brokers in a similar manner to its more ubiquitous online advertising offerings. Online self-service TV ad books will be one technology developed to attract non-traditional advertisers to TV at cheaper rates under Google TV Ads.

Ironically, Google CEO Eric Schmidt – formerly with Sun Microsystems and Novell – was a government witness in the Justice Department’s lawsuit against Microsoft during the 1990s.

While Microsoft managed to successfully appeal its court-ordered break-up, its constant reargard action against the Justice Department during the Clinton era dug deeply into then chief executive Bill Gates’ time, and was seen as inhibiting the company’s options for expansion via takeovers. (The Justice Department antitrust action against Microsoft was dropped altogether with the arrival of the Bush administration).