The US v. Google AdTech Antitrust Case: A Timeline

The US Government Vs Google a Timeline.

The US government and Google are currently embroiled in a legal battle, with the Department of Justice (DOJ) accusing Google of having an unfair monopoly in advertising technology markets. 

In this edition of LabTalks Weekly, Adam Chorley tells you the DOJ  Vs Google as a story by creating a timeline of witness statements, highlighting key moments and narrating its impacts on the publisher network and the advertising industry.

DOJ Opening Arguments:

The DOJ opened up by “saying the quiet part out loud,” with a powerful telling of Google’s trifecta of monopolies: the advertiser ad network, publisher ad server, and ad exchange that connects the two.  She explained that the DOJ’s goal is “freedom of choice for all market participants.” 

1. Control of competition: Google didn’t innovate - it “acquired its way to success” the DOJ contends, referencing Double click and Ad meld acquisitions. Google used the “power of the purse” according to the DOJ - saying it’s been a game of whac-a-mole, where Google uses its power in one market to cement its dominance over another.

2. Control of customers: DOJ spoke to the tying of Google Ads to AdX, and AdX to GAM/DFP.
The DOJ says that while Google frames it as legitimate “refusal to deal,” Google’s “all or nothing” strategy was intentional (citing PTX0124).

3. Control of the Rules: DOJ speaks to how Google took “first look” advantage, with AdX “cutting the line” to see what it has to pay to win. DOJ explains last-look using an analogy of a silent auction where one player could open the envelope and offer to pay a penny more. Also, set up Google’s assault on Header Bidding, and how it removed the right  of publishers to set prices via Unified Pricing Rules, imposing it by fiat.

Google Opening Arguments:

Google started off with a history lesson on RTB as a game-changer, and how since then Google has invested billions into Ad-tech to make tools that operate “seamlessly” and “securely.”  Google explains that Ad-tech is intensely competitive. Google points to the 18x growth in display ad spend, and downplaying Google’s share of the alleged single two-sided market.  Google points to the rapidly changing market, and how the DOJ is asking to control an uncertain future.

Here is Adam Chorley breaking down the Witness statements for you

You can read them in detail here.

A few excerpts from the Chorley’s document are below. Adam writes about the case as if it is straight out of a John Grisham book and we felt it was almost criminal to edit it.

He starts with telling you about the most interesting parts of the case

The one I was most interested in is the ad network monopolisation claim that we’ve heard the least about explicitly. He began by explaining how Google’s market power in the ad network market - i.e. the millions of primarily smaller advertisers forming the basis of its unique demand - originated with Search. He (Jonathan Bellack, Ex Google, Director of Project Management)then explained the direct evidence he found, where he used Google’s own experiment data to show that they could profitably increase Google Ads fees by +7%. 

He also explains that Google was able to reduce “quality” by restricting access to inventory, where quality for advertisers is defined as ROI.  The rest of the analysis focused on the publisher.  For example, how Google Ads won 28% of auctions, and removing Google Ads from the auction would reduce bids by 14%.  Analysing Google’s advertiser ad network market power from the perspective of publisher impact is an interesting approach. Here’s his expert report where most of this comes from for those that are interested.

He then talks about some nerve wrenching moments in the case

On cross, the DOJ asks for Spaghetti Football to be put up on the screen, and one-by-one, removes the products that do not allow publishers to monetize display ad inventory on their websites, so we’re left with…the products that form the basis of the markets in the DOJ’s complaint.  Look at that. The impossibly tangled web can be untangled after all. Next, the DOJ pulls up internal documents where we see Google does indeed track web display inventory separately from other ad inventory like search, instream video, native app, native web."

And Talks about his most anticipated moments.

The moment I’ve been waiting for arrives, as the DOJ asks Bjorke if he was aware of reports identifying Google running ads on sanctioned sites in Iran (Adalytics) and Bosnia (Propublica), or that 48% of traffic on fake news comes from Google (University of Michigan). Bjorke is not aware of these reports.

And then the story gets more gripping.

The DOJ did a great job at tearing down the facade. We see a document about how Google has 313 policies, but only 10% are actively managed, although the safety team believed that 58% should be. Of 49 inappropriate or harmful content policies, 19 were actively managed. Of 14 Scam policies, 2 were actively managed. Privacy was 1 of 28.  Legal risk was 0 out of 22.  Ecosystem cleanliness also had 0 policies actively managed.

We see charts of how crude oil production (Standard Oil), PC shipments (Microsoft), and Long Distance Calls (AT&T) all trended upwards at a time when those markets were monopolised. Digital ad spend shows the same trend, so does this on its own show that the market is healthy? Nope.

After some administrative back and forth, the defence rests. Google asked to be heard about the issue raised where Google took a contradictory position on adtech as a two-sided market within their motion to dismiss. Judge Brinkema explains that market definition is a core issue to this case, and one that the Court needs to resolve, looking at all of the evidence, and that it is somewhat problematic to Google that they took one position where it benefited them, and a different one here.

The DOJ asks if Adsense is a substitute for DFP. No, it isn’t. DOJ asks if advertisers shift spend from open web display to social, does it impact publisher negotiations with Google (as Israel suggested). No, it does not. Daily Mail makes most of its money from open web display. That doesn’t change if marketers shift spend to social. Does increasing app and CTV media consumption impact Google negotiations? Same answer.

Has Google made it more difficult to do direct sales? Yes. He explains (without explicitly naming EDA) that Google implemented a feature that allows Google to reach up into direct inventory to have it compete against indirect, where others cannot. Building an in-house ad server isn’t viable. Even after the investment, you still will lose AdX real-time demand. Could they just use a Header Bidding wrapper? No. They have direct deals too, and they need an ad server for those. Also, if HB auction runs directly on the page, there’s no AdX competition.

No, publishers don’t see the benefits of Google’s integration.  It’s not cheaper. There are features they never asked for or wanted. For HB they have to create thousands of line items. Integration does not make it safer, and AdX does not have better quality ads. What he’d prefer, he explains, is to have  choice - in another world, maybe he would choose which products work best.

Don't forget to read about it here.

Google certainly worked hard to maintain a dominant position in the market, making it almost impossible for others to compete. Some of this does bring into question the incentives traditional finance brings. Directors are duty bound to make sure they increase value for shareholders. Growth is a must and doing it at any cost is almost impossible to do without being very aggressive. 

Web3 business models are very different and seek to gain growth through adoption and user base. The value is distributed back to token holders and the legal obligation to token holders is lower. It allows people to vote with their feet but also not make directors act against their better nature in order to keep making larger and larger profits. Instead they have aligned incentives but can also use their own moral judgements to make decisions. 

Nevertheless, the case's final arguments are set for Monday, November 25 in Alexandria, Virginia. Judge M. Brinkema is anticipated to issue an official decision early in the upcoming year.

We shall see you next week. Till Then, Stay Amazing!