Google and DOJ’s ad tech fight is all about control

Google and the US Justice Department each judge the different wants excessively overmuch of 1 thing: control.

“Control is the defining diagnostic of a monopolist,” DOJ counsel Julia Tarver Wood said during opening statements successful the national government's 2nd antitrust proceedings against the hunt giant, which kicked disconnected Monday successful Alexandria, Virginia. To the government, Google exerts excessively overmuch power implicit each measurement successful the mode publishers merchantability advertizing abstraction online and however advertisers bargain it, resulting successful a strategy that benefits Google astatine the disbursal of astir everyone else.

To Google, the authorities is seeking power implicit a palmy concern by making it woody with rivals connected much favorable terms, disregarding the worth of its investments successful exertion and the unsocial efficiencies of its integrated tools.

By the extremity of the trial, which is expected to past respective weeks, US District Court Judge Leonie Brinkema volition beryllium near to determine which broadside is exerting excessively overmuch power — and ultimately, if Google has illegally monopolized the markets for advertizing technology.

Markets is a cardinal word, since 1 question raised connected the archetypal time is however galore monopolies Google mightiness really have. (A national tribunal successful DC says astatine slightest one, since it recently ruled Google a monopolist successful search.) The DOJ is arguing that Google has monopoly powerfulness successful 3 antithetic ad-related markets: those for steadfast advertisement servers (where websites hawk advertisement space), advertisement exchanges (which facilitate advertisement transactions), and advertiser advertisement networks (where advertisers spell to bargain advertisement space). They’re besides arguing that Google illegally tied unneurotic its steadfast advertisement server with its advertisement speech to support its monopoly power.

“One monopoly is atrocious enough,” Wood said during opening statements. “But a trifecta of monopolies is what we person here.”

Google says it’s not a monopolist, and successful information there’s lone 1 market: a two-sided marketplace made of buyers and sellers of online advertisement inventory. In opening arguments, its counsel said the authorities is ignoring relevant Supreme Court precedent that says this is the champion mode to presumption specified a market. The institution besides argues regulators are carving up the tract with presumption similar “open web show advertising,” which Google calls contrived. What the authorities truly wants here, Google claims, is to necessitate it to woody with its rivals — thing the Supreme Court has said isn’t truly the occupation of the judicial system.

After opening statements, the DOJ began calling its archetypal witnesses, focusing connected the tools publishers usage to monetize show ads. These are the ads that typically popular up astatine the apical oregon the broadside of the leafage connected quality websites and blogs, populating done super-quick auctions that tally portion the leafage loads. During the auction, an advertisement speech helps lucifer publishers and advertisers based connected things similar taxable and terms without progressive involution by a human. The process is called programmatic advertising, and it’s utilized by The Verge’s genitor institution Vox Media among galore others. (Vox Media president of gross and maturation Ryan Pauley is connected the database of imaginable witnesses but wasn’t called today.)

Google’s tools play an indispensable relation successful the process, with immoderate of them holding astir 90 percent of the market, according to the government. Google has a steadfast advertisement server called Google Ad Manager (formerly DoubleClick for Publishers, oregon DFP), which helps publishers merchantability advertisement space. It operates an advertisement exchange, AdX, that facilitates transactions. And it owns an advertiser advertisement network, rounding retired its trifecta of large products crossed antithetic parts of the advertisement world.

Four manufacture players testified Monday, representing a steadfast (Tim Wolfe, SVP of gross astatine Gannett), an advertisement speech (Andrew Casale, president and CEO of Index Exchange), a marketer (Joshua Lowcock, president of media astatine Quad), and a steadfast advertisement web (James Avery, laminitis and CEO of Kevel). Across the testimonies, the authorities tried to found that programmatic show advertizing is not thing publishers tin easy substitute with different types of advertising, including nonstop deals with advertisers oregon ads connected societal media sites. And it introduced the thought that switching from Google tools isn’t specified an casual decision, adjacent erstwhile determination mightiness beryllium immoderate crushed to bash so.

In testimony, for instance, Wolfe and Avery some made wide that publishers are mostly unwilling to power distant from Google Ad Manager. They said it’s due to the fact that Google packages it with entree to AdX, and losing that bundle woody would mean giving up ample amounts of gross — adjacent if rivals connection to instrumentality a overmuch smaller chopped for facilitating each advertisement sale. Wolfe testified that erstwhile Gannett received 1 specified offer, that reduced instrumentality complaint didn’t determination the needle, since it wouldn’t offset the benefits of AdX.

The advertisement server institution Kevel started by targeting accepted publishers, but Avery says competing with Google proved impossibly hard. He recalled publishers asking however his institution would regenerate the gross they made from AdX, thing Kevel simply couldn’t manage. After trying to prosecute Google doubly astir ways to link Kevel’s advertisement server with AdX, Avery testified, his efforts were rebuffed. Kevel pivoted to facilitating things similar sponsored listings for retailers instead.

Speaking from the advertisement speech perspective, Casale testified that switching advertisement servers is simply a large assistance astatine the method level, truthful publishers seldom bash it. Building a caller 1 is “very analyzable and expensive.” In the advertisement speech market, Casale said competing with Google’s AdX is “very challenging,” and successful experiments, reducing fees had hardly a “nominal” interaction connected the quality to summation much business. Because of the immense web effects it takes to get an speech disconnected the ground, arsenic good arsenic the information that it lone gets visibility into advertisement impressions it wins, “I can’t ideate anyone starting a caller speech today,” helium said.

Google’s attorneys poked astatine the witnesses’ arguments and credibility during cross-examination, pointing retired ways players similar Avery would payment if the tribunal forced Google to stock entree to its tools. Google volition telephone its ain witnesses to antagonistic the DOJ aboriginal successful the trial.

This proceedings covers precise antithetic crushed from past year’s antitrust combat successful the District of Columbia. But connected the archetypal time of court, some sides alluded to their earlier battle. The Department of Justice mentioned during opening statements that different tribunal had already adjudicated the question of Google’s hunt monopoly, referencing a ruling Judge Amit Mehta handed down just implicit a period ago. And though Mehta ruled mostly against Google, the tech elephantine cited a portion of the ruling that went successful its favor. The topic? A DOJ statement Mehta interpreted arsenic a request for Google to chopped deals with competitors — and, accordingly, dismissed.