In The Wall Street Journal today, Texas Attorney General Ken Paxton, who is spearheading a multistate antitrust investigation into Google, made an egregious error. Paxton, in an effort to demonstrate Google’s alleged dominance of the online advertising market, wrote:
Each year more than 90% of Google’s $117 billion in revenue comes from online advertising. For reference, the entire market for online advertising is around $130 billion annually.
Paxton thus makes it seem like Google controls over 80 percent of the online advertising market.
This is completely false.
The $117 billion revenue figure Paxton cites is a global revenue figure (see page 27 of Google’s form 10-K for 2018). The $130 billion online advertising figure, on the other hand, is not the “entire market” as Paxton claims. According to AdWeek, $130 billion is only the size of the U.S. online advertising market.
Per the same AdWeek report, Google’s share of the online advertising market in the U.S. is a mere 37 percent—and falling.
The states’ case against Google rests heavily on demonstrating the company’s dominance in online advertising. Paxton writes, “When one company holds such a commanding and unchallenged grip on a $130 billion online market, it is the responsibility of antitrust enforcers to ensure the interests of consumers are being protected.” Yet in the same column, Paxton made Google look to be more than double its actual size in justifying his argument.
Whether this was a careless mistake or a deliberate attempt to mislead cannot be determined. Either way, it demonstrates the weakness of the states’ case against Google and why we shouldn’t allow politicians with such fundamental misunderstandings of the market to intervene with the heavy hand of antitrust law.