Pomerantz Prevails Against Motion to Dismiss Claims Against Alphabet and Google

By the Editors

On March 24, 2025, U.S. District Judge Rita F. Lin of the Northern District of California sustained investors’ securities fraud claims against Alphabet and Google in a high-profile litigation that involves allegedly false and misleading statements made by Google to investors concerning Google’s digital advertising technology. Google’s allegedly improper practices are the subject of several lawsuits alleging antitrust violations by the Attorneys General of two dozen states and the Department of Justice. Pomerantz serves as sole lead counsel in the litigation.

Alphabet’s subsidiary Google is the dominant player in the field of digital advertising. According to plaintiffs’ second amended complaint, “Google’s dominance in the entire ad tech industry has been questioned by its own digital advertising executives, at least one of whom aptly asked: “[I]s there a deeper issue with us owning the platform, the exchange, and a huge network? The analogy would be if Goldman or Citibank owned the NYSE.””

The ABCs of Digital Advertising

Display ads are image-based ads on websites, which may contain images, text or multimedia. A single display ad shown to a single user on a single occasion is an impression. A website’s owner or an online media company is a publisher. Publishers of news articles usually monetize their content with targeted display ads shown alongside the article. Internet advertisers may include businesses, government agencies, charities, political candidates, and other entities.

Online publishers sell their inventory of display ads to advertisers either directly or indirectly. For example, The New York Times, as an online publisher, could negotiate directly with Apple, as an advertiser, to display Apple’s ads atop the NYT homepage one million times in a particular month. However, a publisher cannot always predict how many of its ad spaces will be available to sell directly to advertisers because its inventory depends on how many users visit its website. Publishers can, therefore, find themselves with unsold, surplus inventory.

Publishers use software known as an ad server to make their impressions available for sale. Since 2008, Google has owned the industry’s leading ad server, Google Ad Manager (GAM), which is often still referred to by its former name, DoubleClick for Publishers (DFP).

Indirect sales occur through centralized electronic trading hubs, or ad exchanges (a/k/a supply-side platforms or SSPs) and through networks of publishers and advertisers. Publishers can use an ad exchange to auction off some or all of their inventory to buyers in real time for a percentage fee, or sell their inventory to a network, which in turn will resell it to an advertiser for an undisclosed markup. Google owns the industry’s leading ad exchange, Google AdX, now packaged with DFP as part of GAM. GAM currently controls over 90 percent of the digital advertising market in the United States.

In 2000, Google launched Google Ads, a tool that allowed businesses to buy ads that would be seen by Google search users alongside their search engine results. Advertisers, drawn by the power of such instantaneous, highly targeted advertising, flocked to Google Ads.

Unbeknownst to Investors, Google Favors Itself

Google began requiring publishers who chose to use Google Ads to also use its ad server DFP and its ad exchange AdX. Google did not disclose that it programmed DFP to give Google’s own ad exchange, AdX, the first chance to buy impressions before they were offered to other ad exchanges, and often to do so at artificially low prices.

Google then profited by charging high fees on AdX, while neither advertisers nor publishers could leave for other ad exchanges, having no access to one another. Publishers fought back with “header bidding,” which involved inserting code into their webpages that allowed other non-Google ad exchanges to bid on their impressions before Google’s hard-coded preference for AdX was triggered. Google saw header bidding as a major threat to its digital advertising dominance.

Pomerantz’s complaint alleges that even before header bidding emerged, Google had singled out Facebook— one of the biggest ad buyers on the internet—as a competitive threat. In March 2017, Facebook announced that its Facebook Advertising Network (FAN) would participate in header bidding, permitting its advertisers to bypass Google’s platform and chipping away at its revenues. Crushing the “existential threat” posed by header bidding and Facebook became a major priority for Google. Securing Facebook’s participation in Google’s open bidding system was so critical that Pichai personally negotiated a deal to convince Facebook to abandon header bidding. Enticing Facebook required significant concessions, with Google agreeing to give Facebook the same benefits it maintained over other bidding participants. Those perks included additional time to bid for ads, auction matching advantages, the ability to detect which impressions were targeted to bots, and a predetermined “win rate.”

Pomerantz and Plaintiffs Prevail

Judge Lin found that Pomerantz adequately alleged that the advertising auctions favored bids submitted through Google-owned platforms or FAN, which had an agreement with Google:

“Allegedly, bidders operating through those channels received extra time, additional nonpublic information, and other advantages. Plaintiffs have further adequately alleged that Pichai was sufficiently involved in the negotiation regarding FAN that he was well-aware of these advantages when he represented otherwise in his September 2020 statement.”

According to Partner Emma Gilmore, who co-leads the litigation with Jeremy A. Lieberman, “The court sustained plaintiffs’ claim that CEO Pichai made a false representation to Congress with the intent to deceive the market when he testified that “the channel through which a bid is received does not otherwise affect the determination of the winning bidder.” This is a significant win for investors, paving the way for them to recoup their losses in Google, an advertising juggernaut.”