Google’s ad tech monopoly trial, simplified

The world of technology is largely a network of interconnected monopolies where tech giants operate in ecosystems, making it difficult for competition to make space for themselves. Curbing one’s power doesn’t guarantee a more competitive market, however, it shifts the power from one tech giant to another. After all, Microsoft’s loss in the antitrust lawsuit in the late 1990s allowed companies like Google to rise. In the wake of the Department of Justice's (DOJ) assertion that Google is a monopoly in the digital ad space, the company's future could change the way tech companies operate. The lawsuit began on September 9 and focused on Google defending itself against claims of operating its advertising business as a monopoly, leading to higher ad prices for customers.

In the closing arguments of its second trial, the DOJ argued that Google’s dominance has stifled competition in the ad tech ecosystem. The company is said to have leveraged its vast control over both the buy-side and sell-side of digital advertising. The trial's outcome could reshape the entire digital advertising landscape, especially considering that future updates could potentially break up Google.

Moreover, the company's previous legal trial in August, already declared its monopoly in the search market and Google might be forced to sell Chrome. The ad tech lawsuit marked its closing arguments on November 25, 2024 and Virginia Judge Leonie Brinkema will be announcing further ramifications for the company regarding its ads business in 2025. Before the ad tech trial even began, Google tried to defend itself by arguing that its success was not a result of any illegal practices but due to consumers preferring its services. The company claimed that people choose to use its search engine because it is the best product available. 

While we await the final judgments, we break down everything that happened during the second trial on the ad tech monopoly from September to November 2024. 

Trial Kickoff

• DOJ’s Opening Statement: On September 09, the DOJ emphasised Google’s dominance in ad tech, focusing on how it harms publishers and could potentially lead to the divestiture of Google’s sell-side ad tech products.

• Publisher Testimonies: Gannett’s Tim Wolfe testified about the heavy dependency on Google’s ad tools, with Google taking over 50% of Gannett’s programmatic ad revenue. Gannett’s use of header bidding led to a 15-20% CPM increase, showing publishers' attempts to escape Google’s grip.

Google’s Negotiating Stance

• News Corp’s Testimony: Stephanie Layser discussed News Corp’s failed attempt to leave Google's ad ecosystem (according to an evaluation from Project Cinderella) saying if they had, it would have cost them $9 million in 2017 to ditch Google ads, reinforcing DOJ’s claims of Google's ‘tying’ practices.

• Internal Google Strategies: Eisar Lipkovitz revealed how AdX became the default exchange in Google’s ecosystem, locking publishers in and stifling competition. He also mentioned internal conflicts over blocking header bidding and the emotional toll it took.

• Secret Projects: The DOJ presented evidence of Google manipulating auction outcomes through projects like ‘Jedi Blue’ and ‘Project Poirot.’

Internal Google Communications

• Brad Bender's Testimony: Google’s former VP of product discussed how the company sought to dominate the display ad market post-DoubleClick acquisition in 2008, by ‘crushing’ competition.

• Evidence of Bundling: The DOJ highlighted Google’s strategy of bundling its products to lock publishers into its ecosystem, making competition more difficult.

• Google's Response to Header Bidding: Google’s efforts to block header bidding practices, including dynamic floor pricing adjustments, were presented as evidence of its attempt to maintain dominance.

Key Testimonies on Competition

• Publisher Concerns: DOJ introduced audio from a 2019 meeting where publishers voiced concerns over losing control to Google, which Google defended as efforts to improve transparency.

• PubMatic Testimony: Rajeev Goel, CEO of PubMatic, testified about Google's refusal to integrate PubMatic’s API, which prevented competitors from growing.

• The Trade Desk's Growth: Testimonies discussed how Google’s market dominance stifled the growth of ad tech competitors.

Testimonies on Auction Control and Transparency

• Testimony from Ad Tech Executives: Executives from companies like The Trade Desk, PubMatic, Rubicon Project, and AppNexus testified about the challenges they faced in competing with Google. Testimonies revealed how Google manipulated ad auctions and restricted transparency, hurting both competition and publishers.

• Strategic Acquisitions: Witnesses discussed how Google's acquisitions, like AdMeld, further cemented its control over ad tech.

• Focus on Header Bidding: The importance of header bidding as a means for publishers to break free from Google’s dominance was reiterated, along with issues like the ‘Last Look’ practice used by Google. DOJ’s evidence points to Google’s desire to crush competition in the $600 billion display ad market.

• High Take Rates: Emails revealed Google’s strategy to keep high take rates (around 20%) on AdX despite competition.

• Silencing Critics: Google executives dismissed internal dissent over the impact of its acquisition of DoubleClick. It also attempted to discredit key ad tech figures testifying for the DOJ.

• Defence Strategy: Google argues that its end-to-end ecosystem is more efficient than competitors like Amazon and Microsoft.

Focus on AI and Google’s Defence

• Google’s Defence: Google continued to argue that its ad tech promoted competition, citing how its ecosystem supports smaller advertisers and enhances efficiency. It also pointed out that the DOJ’s market definition ignored key sectors like social media and connected TV.

• Ad Tech Innovation: Google highlighted that its tools made the ad market more competitive, despite the DOJ's accusations.

• Google’s Claims: The defence presented Google’s ad tech as more effective and cost-efficient than competitors, arguing that its integrated tools improved customer experience and reduced costs.

• Ad Control: Google argued that publishers and advertisers had significant control over ad buying and selling, challenging the DOJ's assertions.

Reshuffling at Google

Following the trial, Google announced a reshuffling of its leadership, with Prabhakar Raghavan stepping down from his role overseeing Google Search, Ads, and Commerce, as part of a broader focus on AI in October 2024. Nick Fox, Raghavan’s former deputy, will lead Google’s Search, Ads, Geo, and Commerce divisions. Google is also reshuffling teams, with Gemini and Google Assistant moving to other divisions.

Closing Arguments

• DOJ’s Closing Argument: On November 25, the DOJ used ‘A Tale of Two Cities’ to describe the stark contrast between Google’s claims of industry growth and the grim reality faced by publishers and ad tech providers under its control.

• Market Definition Disputes: Leonie Brinkema, the judge, questioned Google’s broad market definition, challenging the inclusion of social media and apps in its market view.

• Evidence Concerns: The DOJ asked for an ‘adverse inference’ due to missing internal communications, which might suggest misconduct on Google’s part. Brinkema noted that the company’s document retention policies were ‘not the way in which a responsible corporate entity should function’ implying that a lot of evidence has been destroyed.

It has been suggested that the DOJ might prevail, given the evidence of Google's monopolistic conduct in the programmatic ad market. The DOJ remarked that ‘Google is once, twice, three times a monopolist.’ This trial is expected to have significant implications for Google and the digital advertising industry. The ruling is expected in the coming months.