Shares in advertising group Magnite (MGNI) dropped nearly 6% today as it sued U.S. tech giant Alphabet (GOOGL) for running an “unlawful monopoly” in advertising technology.
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Magnite said today it has filed a lawsuit against Alphabet’s Google unit in Virginia and is seeking monetary damages.
Direct Harm
It said in the lawsuit that Google’s business of open-web display advertising has hampered growth and innovation in the sector for over 10 years, and that the tech giant’s strategies “directly harmed” Magnite’s operations. It added that it continues to face the consequences of Google’s actions.
Magnite, which is an advertising platform that connects publishers with advertisers, claims that Google has engaged in an “exclusionary scheme to lock publishers into its ad server and to preference its own exchange.”
It said that Google had prevented Magnite from competing fairly to grow its business. Magnite Chief Executive Michael Barrett said Google “favored its own business over the health of the open web, causing harm to publishers, advertisers and partners like us.”
That harm could continue, however, given its share price reaction today. It perhaps shows how difficult it can be to take on tech giants today.
Monopoly Clues
However, Barrett added: “Magnite was founded to help publishers thrive by maximizing their advertising yield through innovative technology, trusted guidance, and a transparent marketplace that efficiently connects them to buyers. For years, Google undermined our ability to execute on this mission.”
Magnite might have some grounds for optimism regarding its lawsuit.
In an April decision of an antitrust lawsuit brought by the U.S. Justice Department, a U.S. District Court ruled Google violated antitrust law by monopolizing digital advertising markets. The court said Google implemented several actions to preserve its monopolies in the markets of publisher ad servers and ad exchanges.
It is why legal and regulatory issues are such a key risk for major tech stocks like Google – see below:
Google dismissed the Magnite allegations as “meritless” as advertisers and publishers opt for Google’s ad tech services because they are “effective, affordable and easy to use.”
Is MGNI a Good Stock to Buy Now?
On TipRanks, MGNI has a Strong Buy consensus based on 12 Buy and 1 Hold ratings. Its highest price target is $39. MGNI stock’s consensus price target is $27.81, implying a 23.88% upside.
