Both Google and the U.S. Department of Justice believe the other wants too much of one thing: control.
“Control is the defining characteristic of a monopolist,” Justice Department lawyer Julia Tarver Wood said in opening statements in the federal government’s second antitrust trial against the search giant, which began in March. It begins Monday in Alexandria, Virginia. For the government, Google exerts too much control every step of the way over how publishers sell ad space online and how advertisers buy it, resulting in a system that benefits Google at the expense of nearly everyone else .
“Control is the essential characteristic of a monopolist”
For Google, the government is seeking control of a successful company by letting it deal with competitors on more favorable terms, ignoring the value of its technology investments and the unique efficiency of its integration tools.
At the end of a trial that is expected to last several weeks, U.S. District Court Judge Leonie Brinkema will decide which party exerted too much control and, ultimately, whether Google illegally monopolized the ad tech market.
market is a keyword because one of the questions raised on day one was how much monopoly power Google might actually have. (A federal court in Washington, D.C., said at least as much, as it recently ruled that Google is a monopoly in search.) The Justice Department believes that Google has monopoly power in three different ad-related markets: The market for publisher ad servers (where websites These sell ad space), ad exchanges (facilitate ad exchanges) and advertiser ad networks (where advertisers buy ad space). They also argue that Google illegally tied its publisher ad servers to its ad exchanges to maintain its monopoly power.
“Monopolies are bad enough,” Wood said in his opening statement. “But we have a triple monopoly here.”
“We have a triple monopoly here”
Google says it is not a monopoly and in fact has only one market: a two-way market of buyers and sellers of online ad inventory. Its lawyers said in opening arguments that the government was ignoring relevant Supreme Court precedent that suggested this was the best way to look at such markets. The company also argued that regulators were carving up the space with terms like “open web display advertising,” which Google said were contrived. Google claims that what the government really wants is to require it to deal with competitors — something the Supreme Court said isn’t actually the justice system’s responsibility.
After opening statements, the Justice Department began calling its first witnesses and focused on the tools publishers use to monetize display ads. These ads typically appear at the top or side of pages on news sites and blogs, and are filled via ultra-fast auctions that run when the page loads. During the auction process, ad exchanges can help match publishers and advertisers based on factors such as topic and price, without manual intervention. This process is called programmatic advertising, and its users are marginal Parent company Vox Media, etc. (Vox Media president of revenue and growth Ryan Pauley was on the list of potential witnesses but was not called today.)
Google’s tools play an important role in this process, with some accounting for about 90% of the market, according to the government. Google has a publisher ad server called Google Ad Manager (formerly DoubleClick for Publishers, or DFP) that helps publishers sell ad space. It operates AdX, an advertising exchange that facilitates transactions. It also has an advertising network of advertisers that complements its three main offerings in different areas of the advertising world.
Four industry players testified Monday, representing a publisher (Tim Wolfe, senior vice president of revenue at Gannett) and an ad exchange (Andrew Casale, president and CEO). Index Exchange founder), marketer (Quad Media president Joshua Lowcock) and advertising network publisher (Kevel founder and CEO James Avery). Throughout the testimony, the government sought to demonstrate that programmatic display advertising is not something publishers can easily replace with other types of advertising, including direct deals with advertisers or ads on social media sites. It introduces the idea that switching from Google tools is not an easy decision, even though there might be some reason to do so.
For example, both Wolff and Ivory made it clear in their testimony that publishers were largely unwilling to abandon Google Ad Manager. That’s because Google bundles access to AdX, they say, and losing that bundle would mean giving up a lot of revenue — even if rivals were willing to offer a smaller cut of each ad sale. Wolfe testified that the reduced adoption rate did not matter when Gannett received such offers because it did not negate the benefits of AdX.
Ad-server company Kevel initially targeted traditional publishers, but Ivory said competing with Google proved difficult. He recalls publishers asking how his company would replace revenue from AdX, and Kevel simply couldn’t do that. Ivory testified that after two attempts to contact Google about connecting Kevel’s ad servers to AdX, his efforts were rebuffed. Kevill instead focused on providing services such as sponsored listings to retailers.
From an ad exchange perspective, Casale proved that switching ad servers is such a big step on a technical level that publishers rarely do it. Building a new one is “very complex and expensive.” Casale said it was “very challenging” to compete with Google’s AdX in the ad exchange market and that in the experiment, lowering fees had little “nominal” impact on the ability to get more business.. Because the exchange requires a huge network effect to launch, and it only sees the ad impressions it earns, “I can’t imagine anyone launching a new exchange today,” he said.
Google’s lawyers explored the witnesses’ arguments and credibility during cross-examination, noting that actors like Avery would benefit if the court forced Google to share access to its tools. Google will call its own witnesses later in the trial to rebut the Justice Department.
“I can’t imagine anyone starting a new exchange today”
The trial covers very different territory than last year’s antitrust fight in the District of Columbia. But on the first day of court, both sides brought up earlier fights. The U.S. Department of Justice noted in its opening statement that another court had already ruled on Google’s search monopoly, citing a decision made more than a month ago by Judge Amit Mehta. While much of Mehta’s ruling went against Google, the tech giant cited one ruling in its favor. theme? Mehta interpreted the Justice Department’s argument as requiring Google to strike deals with competitors and was dismissed.
