Rage Against the Monopolies: Has the Ad Tech Lost to the Walled Gardens?

“*#%^& You, I Won’t Do What You Tell Me!” – a lyric that hits the mark even 30 years later, especially coming from the mouth of the young and rebellious. But imagine that instead of being screamed from the lungs of a dirty, anti-government punk, it becomes a silent slogan in an office room full of suits.

Well, kids, that’s what happens when major corporations gain absolute power, and that seems to have happened with our beloved ad tech. In their current state, open web publishers don’t have many chances against the walled gardens and their monopolies. 

That’s why, sadly, the only structure that can take the Punisher’s role in ad tech is the court… 

Today, let’s dive deeper into ad tech lore, look closer at how to tame the infinite ambitions of major corporations and decide if the fight against monopoly is justified (yes, yes, yes).

Where Did We Turn Wrong?

Reading this article on an iPhone, using Chrome, and being microphoned by Meta (for relevant ad experience, ofc), you’d be surprised to know that it wasn’t always like that.

The Teenage Years of Ad Tech

Oldfags will shed a tear remembering the days of simple banner ads on Yahoo and AOL with incredible conversion rates and early ad servers that couldn’t do 90% of their modern functionality. 

Ad tech had some major names, but no single entity held a monopoly over the ad tech space. Mostly, the Internet remembers the names of Doubleclick (remember this one), ValueClick, and 24/7 Rich Media.

What about the rest of the ad tech players? 

The late 90s and early 00s landscape was very competitive, but the contest was more like a battle royale than large mecha fights. To put it simply, there were fewer advertisers, fewer publishers, and less money. Despite that, everybody with a set of eyes saw the potential of digital advertising, and the ad tech was developing at an incredible pace.

The Change

On a smaller scale, programmatic advertising was the first sign of inevitable changes. Fast, automated, accessible form of open-auctioned media buying meant that whoever kept the most supply and the latest ad tech would win. 

In truth, we have to think outside the advertising box to make decent conclusions. The Internet was changing. In the early 00s, the global web was truly unhinged. From the “kill Ben Laden” flash games on Newgrounds to “how to make meth” on Reddit – you just can’t see stuff like these on mass media anymore unless you lurk deep into 4chan and Telegram.

But it couldn’t last forever: the core audience of nerds, businessmen, and psychopaths was slowly shifting towards a wider reach of grannies, children, and most average of Joes. The Wild West of uncensored, unorganized, and highly customizable web started to become consolidated and standardized.

Here Comes the Money

It was impossible not to get hooked on the simplicity and comfort provided by the likes of Google and Facebook. After all, who needs a customizable user profile if you have the wall and the ability to poke your friend? Who needs privacy when you can inject a tube of endless algorithmic content into your brain? To be honest, nobody suspected what the Internet would be like today, but that hardly matters anymore.

As the users gave the reigns to these new and fresh (at the time) companies, the latter began acquiring key technologies and data assets:

• In 2008, Google bought Doubleclick and gained control of the crucial middle layer between advertisers and website publishers. Later, in 2011, the company bought AdMeld, which helped optimize ad revenue for publishers, further locking in its control over programmatic auctions.
• In 2007, Facebook launched Facebook Ads. In 2012, it bought Instagram, and in 2014, the company acquired WhatsApp. The amount of first-party data and loyal users that came with these gave Facebook a closed ecosystem, which turned out to be one of the strongest walled gardens in the world.
• In 2013, Amazon took a course toward integrating ad services directly into their marketplace. They already had loads of accurate first-party user data, which became a sweet pie for advertisers.

The power vacuum on the global web stage and the accumulation of money and data by the likes of above-mentioned corps led to the birth of the new force, which is still unstoppable today. Or is it?

Walled Gardens vs Open Web Publishers

Our avid readers already know that a walled garden is a closed, self-sustainable ecosystem whose main goods are their own services and their own data. Google, Apple, Meta, TikTok, and every other tech giant you can think of is probably a walled garden.

Naturally, when somebody has nearly unlimited access to the industry’s most valuable assets, they form a monopoly – an environment where there’s no healthy competition. This results in:

• Higher costs for advertisers and lower revenue (up to 35%) for open web publishers;
• Lack of transparency in data ownership;
• Stifling technological progress;
• Barriers to entry for new players;

And you don’t have to look far for clues. The whole industry has been marinaded for three years in anticipation of the third-party cookie death and switch – one blog post from Google and everything came back to its starting point.

Yeah, that sucks. In these conditions, there aren’t many options either. Of course, the open web isn’t dead, and the struggle continues, but how successfully?

In the past (part 1, part 2), we’ve explained the reasons why regular open web publishers are simply outmatched in this fight. In geek language, that’s like being the Rebels and fighting the Empire; that’s like being Guts and trying to slice Griffith; that’s like being David and fighting Goliath, but he came with a helmet on his head.

Sure, there is hope. The Trade Desk is bringing its idea of the authenticated web to the masses, and publishers are uniting into bigger groups and joining shared marketplaces. Meanwhile, angry ad tech enthusiasts ramp up on Twitter about how much they hate corporations.

The measures above are making their impact, but it’s not enough to truly make the closet fall. And that’s where the actors dress in their fancy suits, hire teams of lawyers, and go to the court.

Walled Gardens vs The Law

Let’s be honest: nobody likes it when the government pulls up in its slow and clunky machine and ruins the party for everyone. But sometimes, those tax dollars truly start flowing in the right direction, and Big Brother becomes the only one who can make a significant difference. Or scenario 2: someone appears with pockets and patience big enough to fight the trained packs of corpo-lawyers in court.

Frustratingly, the worst thing about these lawsuits is that they last for eternity, and the results will likely be described to you by my grandkids. Either way, we’ll look closer at how this goes.

Specimen 1: Amazon

Let’s start with light stuff.

Yes, weirdly enough, Amazon is the least controversial walled garden on the list, at least in terms of public resonance and the number of cases. 

February, 2024:

In 2024, there was only one lawsuit caused by corporate greed. You see, at the beginning of the year, Amazon decided that a paid subscription was not enough to cancel all ads. That’s why they added more ads and asked for an additional $3 fee per month to evade them.

The indifferent Californian citizen found out that’s NOT how it was written in the user agreement. The case is still ongoing and seeks at least $5 million from Amazon.

September, 2023:

The big daddy, the Federal Trade Commission (FTC), comes into play only if the corporations have really gone too far. And, of course, Amazon has. The company is accused of using “unfair strategies to stifle competition, including blocking competitors from offering lower prices on other platforms and coercing sellers into using its logistics and advertising services.”

That’s one of the most aggressive lawsuits against the company. If FTC wins, Amazon’s business model will change significantly. Let’s hope that’s the case.

Specimen 2: Meta

The sweaty courtroom filled with suits, the growing tension between prosecutors and lawyers, dozens of cameramen and reporters – all because of a single alien-looking man, arguably one of the most powerful beings in the world. 

Yeah, we’ve all seen that picture more than once. Moreover, all of us know how royally screwed Facebook’s attitude to user privacy is. But that’s not why we’re here today. This time, it’s not the users getting bent over in the most violent way, but advertisers.

June, 2020:

Remember how Facebook acquired both Instagram and WhatsApp? That had its consequences…

In response to this quite evident monopoly case, in 2020, the FTC filed an antitrust lawsuit against Meta. It demanded Meta to divest the platforms so the competition started thriving. 

Initially, the judge dismissed the complaint in 2021. However, in 2022, the case proceeded further.

And you guessed it, this one’s still ongoing.

March, 2024:

Recently, the advertisers of Facebook and Instagram filed a case against Meta for $7 billion.

The synopsis is simple: Meta showed fake ad viewership figures, which were far lower than what the advertisers were getting. How much? About 400%. As a consequence, advertisers paid for their campaigns four times more.

Surely, Meta denies everything, basically claiming that the advertisers misunderstood what they’re paying for. This one either goes to trial, or Meta will pay some compensation to settle the matter.

Specimen 3: Google

The big boy is here. Unintentionally, this is yet another time Google does something wrong/weird and becomes the subject of our analysis.

This time we won’t bore you with every screw-up of the company, we’ve done that plenty already. Let’s simply concentrate on the last one, which is the reason for angry advertisers’ mobs on social media.

January, 2024

The U.S. Department of Justice (DOJ) brought a major antitrust lawsuit against Google. The reasons are unsurprising if you follow ad tech, at least a bit.

Google is responsible for 60% of digital ad spend. Their walled garden is the most dominant of them all, and they’ve already acquired plenty of independent ad tech (Doubleclick, for instance) to have even more valuable assets.

Moreover, the trial in September 2024 showed that ad auctions were manipulated in favor of treatment for its own products. The former executives of the Adx exchange testified that Google had given its platform an upping hand at auctions by blocking competition.

The evidence is there; the witnesses are there. Everybody expects major outcomes for Google, but the case is still going.

Conclusions

Honestly, there ain’t much to tell for the conclusion. The majority of lawsuits are ongoing, and the results will only show in years to come. The monopolies hurt competition; that’s plain as day, but will the sword of law reach today’s subjects? Who knows… Let’s grab our popcorn and see.