Google Inc.’s lucrative online advertising system is facing a U.S. Justice Department investigation that is expected to cost the Internet search leader at least $500 million.
The disclosure made by Google on Tuesday in a quarterly report to the Securities and Exchange Commission serves as the latest reminder of the intensifying regulatory scrutiny facing the Internet’s most powerful company.
European regulators have opened a wide-ranging probe into whether Google unfairly manipulates its search results to favor its own services and rigs its ad system to drive up prices. The Texas attorney general also has been looking into complaints about whether Google’s search recommendations stifle competition.
The SEC documents filed Tuesday provided few details about the nature of the Justice Department’s inquiry except that it involves how Google’s automated system has been treating some unnamed advertisers. Google’s ad network, which primarily delivers short text ads alongside search results and other Web content, is the main way the company makes money. In the first three months of this year alone, Google sold $8.3 billion in advertising.
Google, which is based in Mountain View, declined further comment late Tuesday.
Dealing with the Justice Department’s ad investigation apparently won’t be cheap. In its SEC filing, Google said its management decided earlier this month to set aside $500 million to cover a possible settlement.
That move resulted in a charge that lowered the first-quarter earnings that Google announced in mid-April. With the change, Google’s net income fell from the previously reported $2.3 billion, or $7.04 per share, to $1.8 billion, or $5.51 per share.
Even before the revision, Wall Street had panned Google’s first-quarter results because of rapidly rising expenses that are outpacing the company’s revenue growth. Google’s stock price has fallen 6 percent since the original first-quarter earnings came out while the technology-driven Nasdaq composite index has gained 4 percent during the same stretch. Google shares closed Tuesday at $542.66.
Investors also have been worried whether all the regulatory scrutiny will make it more difficult for Google to counter emerging competitive threats from hard-charging rivals such as Facebook. The Internet’s largest social networking site has built an audience of more than 500 million users that is attracting more advertisers and creating a trove of content in walled-off social circles that can’t be indexed by Google’s search engine.
The Justice Department has previously raised concerns about Google’s market power in court filings. The agency objected to Google’s attempt to win the digital rights to millions of out-of-print books, helping to persuade a federal judge to deny a settlement that would have granted the company’s wishes. The Justice Department also demanded concessions before approving Google’s $700 million acquisition of airline fare tracker ITA Software last month in an effort to preserve competition in the online travel market.
Trump Asks Supreme Court To Delay TikTok Ban
President-elect Donald Trump asked the Supreme Court on Friday to pause the potential TikTok ban from going into effect until his administration can pursue a "political resolution" to the issue.
The request came as TikTok and the Biden administration filed opposing briefs to the court, in which the company argued the court should strike down a law that could ban the platform by Jan. 19 while the government emphasized its position that the statute is needed to eliminate a national security risk.
"President Trump takes no position on the underlying merits of this dispute. Instead, he respectfully requests that the Court consider staying the Act's deadline for divestment of January 19, 2025, while it considers the merits of this case," said Trump's amicus brief, which supported neither party in the case and was written by D. John Sauer, Trump's choice for solicitor general.
The argument submitted to the court is the latest example of Trump inserting himself in national issues before he takes office. The Republican president-elect has already begun negotiating with other countries over his plans to impose tariffs, and he intervened earlier this month in a plan to fund the federal government, calling for a bipartisan plan to be rejected and sending Republicans back to the negotiating table.
He has been holding meetings with foreign leaders and business officials at his Mar-a-Lago club in Florida while he assembles his administration, including a meeting last week with TikTok CEO Shou Chew.
Trump has reversed his position on the popular app, having tried to ban it during his first term in office over national security concerns. He joined the TikTok during his 2024 presidential campaign and his team used it to connect with younger... Read More