By Ronan Shields and Marty Swant • September 23, 2024 •
Ivy Liu
The U.S. Department of Justice has rested its antitrust case against Google’s display advertising business, alleging that it monopolized key digital advertising technologies through a series of anticompetitive practices.
It argues that over the past 15 years, Google has systematically acquired competitors, manipulated ad auctions, and used its dominance in various parts of the ad tech ecosystem to stifle competition.
According to the DOJ, these actions have allowed Google to maintain its dominance in the digital advertising market, inflate ad costs, reduce revenue for publishers, and stifle innovation and competition, ultimately harming consumers and the broader digital ecosystem.
However, from today (Sep. 23), Google will attempt to seize control of the narrative, refuting the DOJ’s specific claims. Outside counsel, Karen Dunn and Jeannie Rhee of Paul, Weiss, Rifkind, Wharton & Garrison, will be front and center of Google’s defense.
Google states the DOJ’s ‘market definition’ is off
Google contends that the DOJ’s case against its advertising technology business reflects an entirely inaccurate conception of how the digital advertising industry has evolved since the early days of the internet.
Those defending Google’s position would likely argue that the U.S. government’s market definition is gerrymandered and made up for the purposes of the lawsuit, with a myopic focus on display advertising, pre-supposing a world that no longer exists.
For example, advertisers are free to use the services of other Big Tech scions such as Amazon and Meta (both of whom dipped their toes in the ad server sector) or Microsoft, which acquired Xandr (neé long-time Google critic AppNexus).
Google claims the DOJ’s assertions are distorted and that acquisitions such as the $3.1 billion purchase of DoubleClick in 2008 and the $400 million purchase of AdMeld in 2011 were indicative of its intent to bring new offerings to the market.
That’s precisely the kind of competition that antitrust law is designed to promote, its defense team is likely to argue in the coming weeks. Rather, Google’s resulting extensive technological development and innovations have enabled publishers to fund their content with advertising dollars, Rhee et al. are likely to argue.
Google’s ecosystem just worked better
Google allegedly used its market power to force publishers and advertisers to use its products exclusively, thereby locking them into its ecosystem and limiting their ability to use competitors’ services.
However, the defense team will likely argue that its end-to-end ecosystem services work more efficiently and (again) point to rival Big Tech services. Additionally, expect them to point out that it has “no duty to deal.”
Google helps the actual little guy
The defense team is likely to point out that Google’s ad tech products are interoperable, and publishers do not have to work solely with Google products.
Furthermore, they are likely to argue that small-to-medium advertisers and publishers use their tools extensively; precisely because of the end-to-end utility of its ad stack. None of these SMEs have the resources to navigate the alternative complicated labyrinth of ad tech companies; rivals that are equally thirsty for their money.
Courtroom tactics?
Trial observers will note how several DOJ witnesses spoke to the contrary in the opening weeks of the trial and point out how even if Google’s strategy over the past 15 years did encourage more digital ad spend, it made sure to take its cut.
That cut was anywhere up to 37%, if the DOJ’s calculations are to be believed (see right).
Hence, it’s worth revising how some of the Google attorney’s lines of questioning during that period could offer a preview for what the second half of the case might look like in terms of how the company’s legal team might seek to poke holes in the DOJ’s case.
During the cross-examination of the DOJ witnesses, Google asked various questions about how they define various aspects of the ad market. For example, they aimed to cast doubt on whether display ads are the same as or interchangeable with other types of ads. For example, they asked one witness why their budget for the U.S. Postal Service didn’t have a specific line item for the web display ads. They also asked why the agency had shifted money away from the display into social media.
Ad tech executives also faced questions about how they do or don’t compete with Google on various fronts. For example, when Google’s attorney asked The Trade Desk’s CRO Jed Dederick competes with Google, he said only with DV360. The attorney asked a few other questions similar to him and other witnesses. It seemed like an attempt to blur the lines between what the DOJ has outlined as the display market and its competitors. The Google attorneys also pointed out how companies like PubMatic and The Trade Desk have also seen growth, despite companies’ claims of being hampered in the display market by Google. Attorneys pointed out The Trade Desk’s CTV and digital audio growth and noted that PubMatic bought Activate to gain market share for SPOs.
Google has also hinted at how the overall ad tech industry has evolved massively over the past decade since many of its alleged actions took place. During Google’s opening statement and in some cross-examinations, the company hinted at how AI could and is already disrupting the space.
At one point, Google’s attorney attempted to ask Quad’s Joshua Lowcock about an old tweet that mentioned ChatGPT is likely to disrupt search. However, the DOJ objected and noted that ChatGPT had not come up in the line of questioning, prompting the judge to sustain the objection and preventing further questions or answers on that topic. The judge also mentioned that she had not heard ChatGPT come up even once yet during the case.
At various times, Google’s attorneys have also asked witnesses whether they see the digital ad market as competitive. They often use the company’s words from their websites, blog posts, and books to illustrate their point. This is key because the DOJ has to prove that Google’s actions had hindered competition.
Observers also note that legal competition is different from companies competing with each other for customers. Some have also noted that what ad tech companies compete for is often what has been left over after Google won its own bids.
Google also sought to discredit various witnesses, showing their depositions were inconsistent with their testimony or that their past statements in news interviews, corporate filings, blog posts, books, and even in one instance, a nearly decade-old Quora post.
Google’s defense case is expected to close by Sep. 27.
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