google ad manager

doj-wraps-up-ad-tech-trial:-google-is-“three-times”-a-monopolist

DOJ wraps up ad tech trial: Google is “three times” a monopolist

One of the fastest monopoly trials on record wound down Monday, as US District Court Judge Leonie Brinkema heard closing arguments on Google’s alleged monopoly in a case over the company’s ad tech.

Department of Justice lawyer Aaron Teitelbaum kicked things off by telling Brinkema that Google “rigged” ad auctions, allegedly controlling “multiple parts” of services used to place ads all over the Internet, unfairly advantaging itself in three markets, The New York Times reported.

“Google is once, twice, three times a monopolist,” Teitelbaum said, while reinforcing that “these are the markets that make the free and open Internet possible.”

Teitelbaum likened Google to a “predator,” preying on publishers that allegedly had no viable other options for ad revenue but to stick with Google’s products. An executive for News Corp. testified that the news organization felt it was being held “hostage” because it risked losing $9 million in 2017 if it walked away from Google’s advertising platform.

Brinkema, who wasted no time and frequently urged lawyers to avoid repeating themselves or dragging out litigation with unnecessary testimony throughout the trial, reportedly pushed back.

In one instance she asked, “What would happen if a company had produced the best product,” but Teitelbaum rejected the idea that Google’s ad tech platform had competed on the merits.

“The problem is Google hasn’t done that,” Teitelbaum said, alleging that instead better emerging products “died out,” unable to compete on the merits.

According to Vidushi Dyall, the director of legal analysis for the Chamber of Progress (a trade group representing Google), this lack of advertiser testimony or evidence of better products could be key flaws in the DOJ’s argument. When Brinkema asked what better products Google had stamped out, the DOJ came up blank, Dyall posted in a thread on X (formerly Twitter).

Further, Dyall wrote, Brinkema “noted that the DOJ’s case was notably absent of direct testimony from advertisers.” The judge apparently criticized the DOJ for focusing too much on how publishers were harmed while providing “no direct evidence about advertisers and how satisfied/dissatisfied they are with the system,” Dyall wrote.

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google’s-ad-tech-empire-may-be-$95b-and-“too-big”-to-sell,-analysts-warn-doj

Google’s ad tech empire may be $95B and “too big” to sell, analysts warn DOJ

“Impossible to negotiate” —

Google Ad Manager is key to ad tech monopoly, DOJ aims to prove.

A staffer with the Paul, Weiss legal firm wheels boxes of legal documents into the Albert V. Bryan US Courthouse at the start of a Department of Justice antitrust trial against Google over its advertiing business in Alexandria, Virginia, on September 9, 2024. Google faces its second major antitrust trial in less than a year, with the US government accusing the tech giant of dominating online advertising and stifling competition.

Enlarge / A staffer with the Paul, Weiss legal firm wheels boxes of legal documents into the Albert V. Bryan US Courthouse at the start of a Department of Justice antitrust trial against Google over its advertiing business in Alexandria, Virginia, on September 9, 2024. Google faces its second major antitrust trial in less than a year, with the US government accusing the tech giant of dominating online advertising and stifling competition.

Just a couple of days into the Google ad tech antitrust trial, it seems clear that the heart of the US Department of Justice’s case is proving that Google Ad Manager is the key to the tech giant’s alleged monopoly.

Google Ad Manager is the buy-and-sell side ad tech platform launched following Google’s acquisition of DoubleClick and AdX in 2008 for $3 billion. It is currently used to connect Google’s publisher ad servers with its ad exchanges, tying the two together in a way that allegedly locks the majority of publishers into paying higher fees on the publisher side because they can’t afford to drop Google’s ad exchange.

The DOJ has argued that Google Ad Manager “serves 90 percent of publishers that use the ad tech tools to sell their online ad inventory,” AdAge reported, and through it, Google clearly wields monopoly powers.

In her opening statement, DOJ attorney Julia Tarver Wood argued that acquisitions helped Google manipulate the rules of ad auctions to maximize profits while making it harder for rivals to enter and compete in the markets Google allegedly monopolized. The DOJ has argued those alleged monopolies are in markets “for publisher ad servers, advertiser ad networks, and the ad exchanges that connect the two,” Reuters reported.

Google has denied this characterization of its ad tech dominance, calling the DOJ’s market definitions too narrow. The tech company also pointed out that the Federal Trade Commission (FTC) investigated and unconditionally approved the DoubleClick merger in 2007, amidst what the FTC described as urgent “high profile public discussions of the competitive merits of the transaction, in which numerous (sometimes conflicting) theories of competitive harm were proposed.” At that time, the FTC concluded that the acquisition “was unlikely to reduce competition in any relevant antitrust market.”

But in its complaint, the DOJ argued that the DoubleClick “acquisition vaulted Google into a commanding position over the tools publishers use to sell advertising opportunities, complementing Google’s existing tool for advertisers, Google Ads, and set the stage for Google’s later exclusionary conduct across the ad tech industry.”

To set things right, at the very least, the DOJ has asked the court to order Google to spin off Google Ad Manager, which may or may not include valuable products like Google’s Display and Video 360 (DV360) platform. There is also the possibility that the US district judge, Leonie Brinkema, could order Google to sell off its ad tech business entirely.

One problem with those proposed remedies, analysts told AdAge, is that no one knows how big Google’s ad tech business really is or the actual value of Google Ad Manager.

Google Ad Manager could be worth less if Google’s DV360 platform isn’t included in the sale or if selling either the publisher or advertiser side cuts out data allowing Google to set the prices that it wants. The CEO of an ad platform called Permutive, Joe Root, told AdAge that “it is hard to say how much of the value of Google’s ads business is because it has this advertiser product and DV360, versus how much of its value comes from Google Ad Manager alone.”

Root doubts that Google Ad Manager is “on its own that valuable.” However, based on “newly released documents for the trial,” some analysts predict that “any new entity spun out of Google” would be “almost too big for any buyer,” AdAge reported.

One estimate from an ad tech consultant who helms a strategic advisory firm called Luma Partners, Terence Kawaja, suggested that Google’s ad tech business as a standalone company “could be worth up to $95 billion” today, AdAge reported.

“You can’t divest $100 billion,” Kawaja said. “There is no buyer for it. [Google] would have to spin it off to shareholders, that’s how any forced remedy would manifest.”

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doj-claims-google-has-“trifecta-of-monopolies”-on-day-1-of-ad-tech-trial

DOJ claims Google has “trifecta of monopolies” on Day 1 of ad tech trial

Karen Dunn, one of the lawyers representing Google, outside of the Albert V. Bryan US Courthouse at the start of a Department of Justice antitrust trial against Google over its advertiing business in Alexandria, Virginia, on September 9, 2024.

Enlarge / Karen Dunn, one of the lawyers representing Google, outside of the Albert V. Bryan US Courthouse at the start of a Department of Justice antitrust trial against Google over its advertiing business in Alexandria, Virginia, on September 9, 2024.

On Monday, the US Department of Justice’s next monopoly trial against Google started in Virginia—this time challenging the tech giant’s ad tech dominance.

The trial comes after Google lost two major cases that proved Google had a monopoly in both general search and the Android app store. During her opening statement, DOJ lawyer Julia Tarver Wood told US District Judge Leonie Brinkema—who will be ruling on the case after Google cut a check to avoid a jury trial—that “it’s worth saying the quiet part out loud,” AP News reported.

“One monopoly is bad enough,” Wood said. “But a trifecta of monopolies is what we have here.”

In its complaint, the DOJ argued that Google broke competition in the ad tech space “by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising.”

The result of such “insidious” allegedly anti-competitive behavior is that today Google pockets at least 30 cents “of each advertising dollar flowing from advertisers to website publishers through Google’s ad tech tools … and sometimes far more,” the DOJ alleged.

Meanwhile, as Google profits off both advertisers and publishers, “website creators earn less, and advertisers pay more” than “they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative ad tech tools,” the DOJ alleged.

On Monday, Wood told Brinkema that Google intentionally put itself in this position to “manipulate the rules of ad auctions to its own benefit,” The Washington Post reported.

“Publishers were understandably furious,” Wood said. “The evidence will show that they could do nothing.”

Wood confirmed that the DOJ planned to call several publishers as witnesses in the coming weeks to explain the harms caused. Expected to take the stand will be “executives from companies including USA Today, [Wall Street] Journal parent company News Corp., and the Daily Mail,” the Post reported.

The ad tech trial, which is expected to last four to six weeks, may be the most consequential of the monopoly trials Google has recently faced, experts have said.

That’s because during the DOJ’s trial proving Google’s monopoly in search, it remained unclear what remedies the DOJ sought. Some ways to destroy Google’s search monopoly could be “unlikely to create meaningful competition” or hurt Google’s bottom line, experts told Ars, but a more drastic order to spin out its Chrome browser or Android operating system could really impact Google’s revenue. It won’t be until December that the DOJ will even provide a rough outline of proposed remedies in that case, Reuters reported, with the judge not expected to rule until next August.

But the DOJ has been very clear about the remedies needed in the ad tech case, “asking Brinkema to order a divestment of Google’s Ad Manager suite of services, which is responsible for many of the rectangular ads that populate the tops and sides of webpages across the Internet,” the Post reported.

Because the most “obvious” remedy would be to require Google to sell off parts of its ad business, experts told AP News that the ad tech trial “could potentially be more harmful to Google” than the search trial. Perhaps at the furthest extreme, antitrust expert Shubha Ghosh told Ars that “if this case goes against Google as the last one did, it could set the stage for splitting it into separate search and advertising companies.”

In the DOJ’s complaint, prosecutors argued that it “is critical to restore competition in these markets by enjoining Google’s anticompetitive practices, unwinding Google’s anticompetitive acquisitions, and imposing a remedy sufficient both to deny Google the fruits of its illegal conduct and to prevent further harm to competition in the future.”

Ghosh said that undoing Google’s acquisitions could lead to Google no longer representing both advertisers’ and sellers’ interests in each ad auction—instead requiring Google to either pick a side or perhaps involve a broker.

Although the Post reported that Google has argued that “customers prefer the convenience of a one-stop shop,” the DOJ hopes to prove that Google’s alleged monopoly has shuttered newspapers across the US and threatens to do more harm if left unchecked.

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