Google and DOJ return for round two of their antitrust fight — this time about ads

Google and the Justice Department are acceptable for a rematch of sorts connected Monday erstwhile they instrumentality to tribunal to reason astir Google’s alleged monopolistic behaviour implicit however ads are bought and sold connected the internet. 

The DOJ is caller disconnected a triumph successful its hunt antitrust lawsuit against Google, wherever a national justice successful Washington, DC, agreed that Google had illegally monopolized the online hunt market. This time, the 2 parties volition reason earlier a antithetic justice successful Virginia astir whether Google has besides illegally monopolized markets for advertizing technology. 

“This is benignant of a one-two punch,” says Vanderbilt Law School antitrust prof Rebecca Haw Allensworth. “Google is astir apt licking its wounds from having mislaid the past one. And it would beryllium atrocious for it to suffer this one, for sure.”

A nonaccomplishment successful either lawsuit inactive wouldn’t mean the “end of Google,” Allensworth says. But for the government, “a 2nd triumph could beryllium existent momentum successful their task of going aft Big Tech monopolies.” And successful particular, she adds, it would validate the DOJ’s absorption connected vertical integration: the mode that antithetic concern lines tin beryllium leveraged to turn a company’s dominance. 

What the lawsuit is about

The DOJ is arguing that Google illegally monopolized the marketplace for advertisement tech tools crossed the ecosystem. That includes the request broadside of advertisement networks for buying abstraction connected websites, the proviso broadside of steadfast advertisement servers for hawking advertizing inventory, and the exchanges similar Google AdX that beryllium betwixt the two. 

The authorities says that Google exerted “a run to condition, control, and taxation integer advertizing transactions implicit 15 years” by illegally tying its tools unneurotic and excluding rivals from being capable to reasonably compete. The suit describes it arsenic a ripple effect that began erstwhile Google built advertiser request done its dominance successful search. Then, Google bought steadfast advertisement server DoubleClick successful 2009, giving it a ample steadfast basal that sought to link with advertisers successful its advertisement network, positive a nascent advertisement exchange. Once Google controlled each sides of the market, the DOJ alleges, it took exclusionary enactment to mutually reenforce its monopolies, including by manipulating advertisement auctions to springiness itself an vantage and placing unfair conditions connected accessing its tools.

Google, connected the different hand, says the authorities is fundamentally looking to punish it for creating invaluable tools with efficiencies that payment publishers and advertisers who usage them. It says the government’s presumption of the marketplace doesn’t bespeak world and ignores vigorous contention it faces and the innovations it’s created to marque its tools charismatic to customers.

The lawsuit involves a highly method marketplace with tons of analyzable tools and processes that astir regular consumers — apt including the justice — don’t brushwood each day. For that reason, Allensworth says, “a batch of it’s going to travel down to who’s the champion storyteller.” 

The lawsuit is expected to past respective weeks and volition diagnostic witnesses crossed the advertizing and publishing industries. Some of the witnesses the DOJ said it could telephone see YouTube CEO Neal Mohan (who utilized to enactment connected Google show ads), The Trade Desk main gross serviceman Jed Dederick, and BuzzFeed main concern serviceman Ken Blom. (Ryan Pauley, president of gross and maturation astatine The Verge’s genitor company, Vox Media, is besides listed arsenic a imaginable witness.) 

What Google and the authorities volition argue

A cardinal constituent of contention is whether the authorities is seeking to unit Google to woody with its competitors. In Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko, the Supreme Court said that generally US antitrust instrumentality does not necessitate firms to woody with rivals. When it comes to a work to woody and litigating Google’s merchandise plan choices, Allensworth says, “the instrumentality determination is precise unfavorable for the government.” 

Because of that, Allensworth says, “the authorities is benignant of hopeless to not framework this arsenic a work to deal, merchandise plan lawsuit erstwhile it comes to the behaviour that’s being alleged.” Instead, the authorities volition question to “highlight the benignant of shenanigans that Google got up to” and the short-term sacrifices it made to solidify its dominance. 

One of those “shenanigans” is however Google handled a strategy known arsenic header bidding. Through header bidding, publishers figured retired that they could nonstop their advertisement calls to different advertisement exchanges earlier going to Google’s to maximize the bids connected their inventory. Recognizing this arsenic an “existential” threat, according to the DOJ, Google created “Open Bidding,” which required publishers and advertisement exchanges to springiness it visibility into however rival exchanges bid. The DOJ alleges that Open Bidding really gave Google much penetration into auctions, helped it extract much fees, and “disintermediated rival advertisement exchanges from their ain steadfast customers.”

Google “did its darnedest to … marque it truly hard to simultaneously person header bidding and besides inactive get the astir retired of your narration with Google arsenic a publisher,” says Evelyn Mitchell-Wolf, a elder expert astatine Emarketer who covers the US integer advertisement market.

To explicate wherefore Google’s refusal to play with rivals’ products is wrong, the authorities whitethorn effort to align its arguments with a antithetic Supreme Court case, known arsenic Aspen Skiing. In that case, a institution bought 3 of 4 mountains successful Aspen, Colorado, past discontinued a walk arrangement that gave skiers entree to each 4 mountains. While there’s nary work to deal, the tribunal recovered that the institution sacrificed short-term profits to wounded its rival and turn its ain dominance.

“Google volition effort to say, we ne'er dealt with these different companies, our rivals, successful immoderate mode that we changed,” Allensworth said. “And past the government’s going to effort to travel backmost and constituent to assorted things and framework them arsenic a alteration successful policy.”

For the publishers and advertisers who trust connected Google’s tools, a ruling against the institution (depending connected the kinds of remedies determined) could pb to a precise antithetic mode of doing business. Mitchell-Wolf says determination could beryllium plentifulness of “logistical headaches” if the Google advertisement tech stack were breached up, arsenic these players would request to find alternatives that enactment good unneurotic successful the abbreviated term. The longer-term anticipation of the authorities would beryllium that specified an enactment would revive contention successful the industry. And immoderate advertisers and publishers would “breathe a small spot of a suspiration of relief,” Mitchell-Wolf says, to beryllium capable to loosen their reliance connected Google.